Affordable Vehicle Prices Expected to Drop: Announcement of Lower Costs for Cars and Motorcycles; Volvo EX30 Previewed for Indian Market Unveiling
In an exciting development for the Indian automotive industry, two significant announcements are set to shake up the market. The Indian government is planning to simplify the Goods and Services Tax (GST) slabs, while automakers like Mahindra and Volvo are introducing new models aimed at capturing the compact SUV market.
Mahindra's strategic reboot, NU_IQ, is a bold move to claim a larger share in India's compact SUV market. This platform will underpin future SUVs from the brand, featuring dual Internal Combustion Engine (ICE)-Electric Vehicle (EV) capability. The company aims to expand its market share over 30% in the SUV segment with this innovative approach.
On the other hand, the next-generation GST reform is expected to make passenger cars and two-wheelers more affordable. The government plans to simplify the GST slabs into two categories: Standard (18%) and Merit (5%). This move could potentially reduce the GST tax burden, leading to moderation or decreases in the final prices of vehicles. If the rates on these vehicles remain at 18%, prices might stabilise or moderately reduce compared to the old 28% slab.
The simplified GST reforms are expected to particularly help boost sales in the mass-market segments, particularly entry-level two-wheelers and subcompact cars under ₹10 lakh. The rationalisation could also help reduce prices on automotive components, making manufacturing more reasonable for auto players.
Volvo Cars India is also joining the fray with its teased EX30 SUV. Already on sale in the international market, the EX30 will be brought into the country in the form of Completely-Knocked-Down units. Positioned under the EX40, the EX30 is designed to cater to the category of premium compact SUV buyers.
The EX30 will face competition from the BMW iX1 LWB, Mercedes-Benz EQA, BYD Sealion 7, Hyundai Ioniq 5, and Kia EV6 in the Indian market. The Volvo EX30 is designed to meet global safety standards and boasts a focus on design maturity.
The next-gen GST reform is poised to improve affordability and stimulate demand in the automotive sector in India. However, the final impact depends on the detailed classification and exact rates finalised by the GST Council in meetings scheduled for early September 2025.
As we look forward to Diwali 2025, when the next-gen GST reform is expected to roll out, the Indian automotive industry is bracing itself for an exciting period of growth and competition.
- Mahindra's new platform NU_IQ aims to give the brand a larger share in India's compact SUV market, with future SUVs featuring dual Internal Combustion Engine (ICE)-Electric Vehicle (EV) capability.
- The Indian government's simplification of Goods and Services Tax (GST) slabs into two categories, Standard (18%) and Merit (5%), could potentially reduce the GST tax burden on passenger cars and two-wheelers, leading to moderation or decreases in the final prices of vehicles.
- Volvo Cars India is set to introduce the EX30 SUV in India, a premium compact SUV designed to cater to buyers in this category and compete with vehicles like the BMW iX1 LWB, Mercedes-Benz EQA, BYD Sealion 7, Hyundai Ioniq 5, and Kia EV6.
- The anticipated next-gen GST reform could stimulate growth and competition in India's automotive industry by improving affordability, but the final impact will depend on the detailed classification and exact rates finalised by the GST Council in meetings scheduled for early September 2025.
