The introduction of GST 2.0 reforms on September 22, 2025, triggered a record surge in the Indian car market, especially for cars priced around Rs 12 lakh. This reform led to an average 10% price reduction on eligible vehicles, fueling unprecedented demand. Leading automakers like Maruti Suzuki sold 30,000 cars, Hyundai sold 11,000 cars, and Tata Motors delivered 10,000 vehicles on the first day of GST 2.0 rate cuts, setting historic sales records.
How GST 2.0 Lowered Prices of Cars Under Rs 12 Lakh
GST 2.0 simplified the tax structure by cutting the GST rate on small cars (petrol ≤1200 cc, diesel ≤1500 cc, sub-4 meter length) from 28% to 18%, while removing additional compensation cess. This resulted in substantial price cuts on hatchbacks and compact SUVs, making cars much more affordable for buyers. Many customers now find diesel automatic cars priced similarly to petrol manual variants, increasing the choices and boosting sales.
Top Value-for-Money Cars Around Rs 12 Lakh Post-GST 2.0
Thanks to GST 2.0, several cars in the Rs 12 lakh price segment now offer better value, enhanced features, and improved fuel efficiency:
Maruti Suzuki Swift VXI Automatic
Priced around ₹7.5 lakh ex-showroom, the Swift VXI Automatic comes loaded with features like LED headlamps, 7-inch touchscreen infotainment, rear parking sensors, and offers excellent fuel efficiency—ideal for city driving.
Tata Altroz Diesel Pure Variant
Offered near ₹8-9 lakh ex-showroom, the Altroz Diesel delivers strong performance with a 1.5L engine, LED projector headlamps, touchscreen with Android Auto and Apple CarPlay, electronically adjustable ORVMs and tire pressure monitoring system.
Hyundai Venue S Plus Diesel
Available at approximately ₹11 lakh on-road, this basic diesel model features a 1.5L diesel engine, halogen projector headlamps, an 8-inch infotainment screen, and rear parking sensors, providing good value for money
Mahindra XUV 3xo Diesel AX5 Manual
Priced near ₹12.5 lakh on-road, this variant stands out with 17-inch dual-tone alloys, panoramic sunroof, full LED lighting, 10-inch digital instrument cluster, Harman Kardon audio, and boasting 300 Nm torque — one of the segment’s highest
Skoda Kylaq Base Model
With a starting price of about ₹7.5 lakh ex-showroom, the Skoda Kylaq base model comes equipped with a 1.2L TSI engine delivering 115 hp, 16-inch steel rims, manual AC, LED DRLs, and a dual-tone interior, offering solid performance at an attractive price.
Impact of GST 2.0 on Consumer Preferences in the Indian Auto Market
The GST 2.0 reforms significantly narrowed the price gap between petrol manual and diesel automatic cars, encouraging buyers to upgrade to feature-rich and fuel-efficient models. This led to a surge in dealership footfall, with car bookings doubling during festive seasons like Navratri 2025. Consumers increasingly prefer automatic and diesel variants for convenience and performance, especially in urban centers.
Rising Popularity of Diesel and Automatic Cars After GST Rate Cuts
Due to competitive pricing post-GST 2.0, demand for diesel and automatic transmission cars has grown substantially. Improved fuel economy, driving comfort, and better resale values have made these variants popular among long-distance commuters and city dwellers alike.