Carmakers pare discounts as GST cut revives small-car demand

Mumbai: Carmakers are steadily pruning discounts on hatchbacks and entry-level models, signalling that the sales surge spurred by has revived demand in the mass-market segment, reducing the need for aggressive price discounts to drive sales. has cut the total discount on the Wagon R to ₹10,000 in June from ₹31,000 in May, while discounts on the Baleno have been reduced to ₹21,000 from ₹31,000.

, meanwhile, has withdrawn incentives on the Tiago and Punch models, after offering discounts of ₹19,000 and ₹26,000, respectively, in May, according to Nuvama Research. Hyundai has also trimmed benefits on the Grand i10 Nios and Exter, pointing to a broader moderation in discounting across the entry-level market.

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Maruti and Tata Motors dealers confirmed the trend. “The demand for small cars and compact cars is very good even after the price hikes in February and April,” said a Maruti dealer. “We are all still enjoying the benefits of the GST cut,” the person said, referring to the reduction in goods and services tax (GST) rates with effect from September 22, 2025.

Tata Motors launched the refreshed Tiago in petrol, CNG, and EV variants last month. “The facelift doesn’t have any offers or incentives on any of the variants and bookings have surged,” said a Tata Motors dealer. “Demand for the CNG variant is the strongest.”

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The reduction in discounts follows a steep price correction under GST 2.0, which lifted demand for entry-level and compact cars.

Sales of Maruti’s Alto and S-Presso models jumped 146% to 32,341 units in the first two months of FY27. Compact and mid-size models such as the Baleno, WagonR, Swift and Ciaz also rose 31% to 162,214 units from 123,872 units a year earlier, company filings showed.

The trend suggests automakers are regaining confidence in affordable cars after the tax cut improved affordability, even as buyers continue gravitating towards SUVs and pricier variants. Entry-level cars had borne the brunt of the slowdown for over five years with their share halving to 23% from the peak of 46% in FY19 amid rising acquisition costs and changing consumer preferences.