Hyundai India uses GST cuts to boost affordability and add features, with 60% of its portfolio now in the 18% tax bracket.
15 Oct 2025 | 1722 Views | By Shristi Ohri
Hyundai Motor India has emerged as a major beneficiary of India's restructured GST regime, with 60% of its portfolio now falling under the lower 18% tax slab following recent price reductions—a strategic advantage that the automaker is leveraging to enhance affordability and drive premiumization across its product lineup.
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Hyundai Motor India has emerged as a major beneficiary of India's restructured GST regime, with 60% of its portfolio now falling under the lower 18% tax slab following recent price reductions—a strategic advantage that the automaker is leveraging to enhance affordability and drive premiumization across its product lineup.
According to presentations made at the company's investor day today, the weighted average ex-showroom price reduction across Hyundai's portfolio ranges from ₹49,730 to ₹2.19 lakh depending on the model, translating to percentage savings of 3.4% to 9.9% for customers. This GST benefit applies differently across vehicle categories, creating both opportunities and challenges for the automaker's pricing strategy.
The 18% Sweet Spot: Volume Models Get Cheaper
The most significant impact is on Hyundai's mass-market models, which now benefit from the 18% GST slab, delivering price reductions of 8.5% to 9.9%. These models form the backbone of Hyundai's volume game and include popular nameplates spanning entry-level hatchbacks to compact sedans and SUVs.
Leading the affordability charge is a compact model showing a price reduction of ₹65,685, making it more accessible to first-time car buyers. The Grand i10 Nios benefits from an ₹80,905 reduction, while multiple compact SUVs see savings ranging from ₹72,121 to ₹84,735. One model even offers customers a choice between petrol and diesel variants with reductions of ₹84,735 and ₹1.15 lakh respectively—a substantial benefit that could influence powertrain decisions.
Notably, Hyundai highlighted that its highest volume contributor—accounting for 30% of sales—now sits firmly in this 18% bracket, maximizing the impact of tax savings on the company's overall sales mix. This volume leader likely represents one of Hyundai's compact SUVs, which have been driving the brand's growth in recent years.
The 40% Bracket: Premium Models Still Benefit
Hyundai's premium lineup, subject to the higher 40% GST slab applicable to larger vehicles, still delivers meaningful price reductions of 3.4% to 6.7%, though the percentage savings are lower. Models in this category show reductions ranging from ₹49,730 to ₹67,740, making premium SUVs and larger vehicles more attainable for aspirational buyers.
This segment is crucial for Hyundai's profitability, as premium models command higher margins despite lower volumes. The GST relief, even if modest in percentage terms, helps offset the psychological barrier of the ₹25-30 lakh price threshold where many buyers experience sticker shock.
The EV Advantage: 5% GST
At the other end of the spectrum, Hyundai's electric vehicles benefit from the lowest 5% GST rate, though the slide doesn't quantify specific savings. This minimal tax burden is part of the government's push to accelerate EV adoption, making electric vehicles more price-competitive with their ICE counterparts despite higher manufacturing costs.
For Hyundai, which plans aggressive EV expansion with multiple models by 2030, this 5% rate provides a structural advantage that will become increasingly important as battery costs decline and EVs approach price parity with conventional vehicles.
Strategic Implications: Premiumization at Same EMI
Hyundai is capitalizing on these GST benefits not merely by advertising lower prices but by pursuing a clever premiumization strategy. The company revealed plans to introduce "new trim options with more aspirational features at same EMI for customers"—essentially using the tax savings to pack more features, technology, and content into vehicles without increasing monthly payment burdens.
This approach addresses a critical insight about Indian car buyers: while they're price-sensitive, they're equally feature-hungry, often comparing specifications across brands before making purchase decisions. By maintaining EMIs but enhancing content, Hyundai can improve its vehicles' perceived value proposition without sacrificing margins.
For instance, the ₹80,905 savings on a popular model could be partially absorbed to add features like a larger touchscreen, advanced driver assistance systems, or premium upholstery—creating a "new" variant that feels like an upgrade but costs the same as the pre-GST version to finance.
Competitive Dynamics
The GST restructuring creates interesting competitive dynamics. Maruti Suzuki, with its small-car heavy portfolio, benefits significantly from the 18% rate on most models. However, Hyundai's strength in the compact SUV segment—where it commands 18% market share—means it captures GST benefits precisely where Indian consumer demand is strongest.
Tata Motors and Mahindra & Mahindra, with portfolios skewed toward larger SUVs in the 40% bracket, see smaller percentage benefits. This potentially helps Hyundai narrow the pricing gap with domestic rivals in the mid-SUV segment while maintaining superior perceived quality and features.
The Road Ahead: Balancing Affordability and Margins
Hyundai's challenge lies in balancing three competing priorities: passing some GST benefits to customers to drive volumes, investing savings in added features to support premiumization, and protecting margins in a competitive market where pricing discipline is crucial.
The company's stated strategy of "continue premiumization strategy across product line-up" suggests it will lean toward feature enhancement rather than aggressive price cuts. This makes commercial sense—Indian car buyers have demonstrated willingness to pay for technology, safety, and creature comforts, particularly in the booming SUV segment.
Moreover, with plans to launch eight hybrid models by FY30 and expand its EV portfolio, Hyundai needs healthy margins on current ICE vehicles to fund the transition to electrified powertrains, which require substantial R&D and manufacturing investments.
The GST windfall provides Hyundai with strategic flexibility at a critical juncture. As India's automotive market continues its post-pandemic recovery and shifts toward SUVs and electrified vehicles, Hyundai's ability to offer more features at stable EMIs—backed by genuine tax savings—could prove a decisive advantage in maintaining its position as India's second-largest carmaker while preparing for the mobility transition ahead.