New Delhi: With new car prices falling significantly post GST cut beginning September 22, 2025, the country’s used car market is also expected to see prices going down by upto 10 per cent, according to car dealers.
Even as prices of used cars are set to fall, the demand in the used car market is likely to remain muted as buyers especially those planning to upgrade from two-wheelers would look for availing the benefit of substantial price cut as a result of lowering GST on small cars from 28 per cent to 18 per cent.
As part of GST reforms, the GST Council in its decision on September 3, 2025 decided to move to a two-slab rates of 5 per cent and 18 per cent with small cars and bikes (upto engine capacity of 350cc) being placed under 18 per cent. A special rate of 40 per cent has been decided for luxury and sin goods. High-end cars would attract 40 per cent GST.
“The lower prices of new cars will certainly have an impact on used car market. The old car prices are largely decided keeping in mind the price of new cars. When a customer goes to buy a five-year old car and finds that the same new car variant is costing Rs 18 lakh he considers depreciation in value of the car over five years. Besides, other factors such as whether there are dents or the car was involved in an accident also come into play. Now that the price of the new car falls by, say Rs 2 lakh, the value of the old car would be determined accordingly. We see old price cars going down by upto 10 per cent on an average,” said Vinkesh Gulati, an auto industry expert who runs dealerships of M&M, Bajaj Auto and Kia India.
Gulati is also Vice President of Automotive Skill Development Council and former President of Federation of Automobile Dealers Associations (FADA). Noting that there has been a massive jump in enquiries and new bookings (10-20 per cent) after GST Council’s decision to reduce taxes, Gulati said that there will be fewer discounts and year-end deals during this festive season.
Shailendra Luthra, Delhi state chairman for FADA and dealer of Skoda, Nissan and Royal Enfield brands also said that the price cut for new cars would have an impact on the prices of used cars.
“Used car prices would be impacted by the cut in prices of new cars. However, it is difficult to currently assess the extent of downward price revision of old cars. Post-GST rate cut, there is a surge in enquiry for new cars. Customers are currently comparing the present offer with that of the reduced price of cars post GST reduction. Surge in enquiry, however, doesn’t necessarily translate into actual sales. With prices of vehicles falling we don’t see car companies offering the kind of discounts they used to offer previously,” he said.
Car majors such as Tata Motors, M&M, Toyota, Skoda and Renault have announced price reduction in order to pass on the benefits of lower GST to customers. Tata Motors has announced a price reduction for most of its cars including Nexon which would see price being slashed by upto Rs 1.55 lakh. Similarly, Toyota and other car companies have also announced price reduction across various models. A CRISIL Ratings report released last July said that the volume of used cars is expected to cross 6 million in fiscal 2025-26, growing by upto 10 per cent year-on-year. India’s used car market is estimated at Rs 4 lakh crore. Value-driven and digitally enabled purchases have spurred the used car market growth in the country in the last few years especially after Covid pandemic.