The sales of hatchbacks in India have fallen significantly since the outbreak of the Covid-19 pandemic in 2020. What was once an aspirational segment for the first-time car buyers in the country has now become a preferred choice for buyers who wanted a second or third car in their household. However, hatchback sales are now witnessing a comeback since the last quarter of CY2025.
According to a recent report by The Economic Times, data provided by automotive research firm Jato Dynamics states that the share of hatchbacks in total passenger vehicle sales increased to 24.4 percent in the October-December quarter from 23.5 percent in the first nine months of the same year. Prior to the pandemic, the share of hatchbacks in the Indian PV market was close to 50 percent.

This revival is largely being attributed to the revised GST structure that came into effect on 22 September 2025. As per the new structure, all small cars will now be levied a GST of 18 percent as opposed to 28 percent in the previous regime. In India, any car that measures less than 4 metre in overall length and is powered by an engine smaller than 1200 cc petrol or 1500 cc diesel qualifies as a small car. The reduction in GST has resulted in lowering of price that has further led to reduction of other applicable taxes.
