GST Effect: Used Cars Seeing Massive 2 Lakh Price Cuts

Written By: Shatrughan Jha
Published: September 20, 2025 at 05:36 PMUpdated: September 20, 2025 at 05:36 PM
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Used car platforms are slashing prices by up to ₹2 lakh in advance of GST 2.0, which comes into effect on September 22, 2025. The cuts are meant to reflect the ripple effect of new car price drops, ensuring buyers and sellers are not caught off guard by sudden market shifts.

Why New Car Prices Matter

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Under GST 2.0, tax on small cars drops from 28 percent to 18 percent, while larger vehicles fall under a flat 40 percent slab that replaces the old cess system. Auto components also move from 28 percent to 18 percent, lowering servicing and repair costs.

This change is expected to bring down on-road prices of new cars by 5-8 percent overall. Passenger cars could see cuts of 2-9 percent, depending on the segment. With new vehicles getting cheaper, the resale value of used cars is also falling, forcing platforms to adjust early.

Where Used Car Prices Are Falling

mahindra scorpio classic

The heaviest corrections are being made in small car listings. With new Tata Tiago prices expected to drop by up to ₹75,000 and the Hyundai Grand i10 Nios by nearly ₹74,000, used versions of these models have been discounted further to keep them attractive.

SUVs are seeing the biggest adjustments. Popular choices like the Hyundai Creta and Mahindra XUV700 could become over ₹1 lakh cheaper in new showrooms. Used car platforms are reacting by cutting prices for pre-owned SUVs by as much as ₹2 lakh in some cases, so that buyers don’t switch directly to new models.

Luxury models are trickier. While new cars in this segment now face a 40 percent slab, the removal of cess may lower some sticker prices. Used luxury car dealers are waiting to see the real impact before making deep adjustments, though early signs point to modest cuts.

Two-Wheelers Also Affected

Royal Enfield Graphite Grey Hunter 350

The same trend is visible in motorcycles. GST on bikes up to 350cc has dropped to 18 percent. New models like the BMW G 310 RR have already seen ex-showroom prices fall by ₹24,000. That means used bike sellers must reset their prices too, since buyers can now get brand-new machines at a lower entry point.

Choices For Buyers And Sellers

For sellers, the risk is clear: the longer they wait, the more resale values may fall. Owners who plan to upgrade could get better trade-in deals now before the full effect of new car pricing is felt.

For buyers, the calculation has changed. Used cars are still cheaper, but the gap with new cars is shrinking. When a new vehicle comes with full warranty, easier financing, and lower service costs, the small extra premium may be justified.

Market Reset Underway

The GST 2.0 rollout is setting off a reset across both markets. New cars are becoming more affordable, and used cars are being repriced to stay competitive. In the short term, both buyers and sellers face tough timing decisions. Over the next few months, the used car market will stabilise at lower price points, aligned with cheaper new alternatives.