New Delhi: Electric passenger vehicle volumes are back in action after the initial knee-jerk reaction to the reduction in GST on internal combustion engine (ICE) vehicles, according to a report by YES Securities. The report noted that festive demand for electric passenger vehicles has remained healthy, with average retail growth of around 15-20 per cent year-on-year.
It stated “E PV volumes back in action post initial knee jerk reaction to reduced GST on ICE”. Original equipment manufacturers (OEMs) are offering higher schemes on stocks aged over 90 days to boost sales.
Additionally, a loyalty discount of Rs 50,000 is being provided to existing brand customers to further support volumes. Inventory levels for EVs are said to be under control as dealers have refrained from picking up incremental volumes, keeping their focus largely on ICE vehicles amid changing market dynamics.
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Another notable trend emerging from the market is the increase in the share of first-time car buyers, which has inched up by 4-5 per cent across regions, a positive sign for the overall passenger vehicle market.
Market interactions indicate that demand trends are shifting back to pre-GST 2.0 levels, with higher preference towards compact and mid-sized SUVs within the passenger vehicle segment.
While the demand for premium hatchbacks and SUVs continues to remain robust, small cars have seen an uptick in bookings by 30-40 per cent, primarily driven by rural demand and higher discounts.
However, within urban markets, small cars continue to face weak natural demand due to their limited aspirational appeal.
The weakness in this segment over the years has been attributed to changing customer preferences, where buyers increasingly seek fresh designs and premium features, and affordability is no longer a major constraint.
Analysts note that the recent increase in small car inquiries is largely a result of sharp price cuts and discounts following the GST reduction, coupled with a rise in 2-wheeler upgrades and vehicle exchanges. The ongoing marriage season is also expected to contribute to additional volumes in this category.
However, the sustainability of this recovery beyond January 2026 remains uncertain.
The current momentum in the small car segment is heavily dependent on the continuation of existing discounts and promotional offers, which are expected to be gradually withdrawn after the festive period.
Industry experts suggest that any sustained recovery in small car demand would hinge on further price cuts or new model launches in the coming months.