GST windfall fades as carmakers line up price hikes from January

Tata Motors said it will hike prices in January

• January has traditionally been a period when carmakers raise prices to factor in cost escalations after clearing older inventory in December

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The sharp cut in GST in September this year may have sparked a rush of new car purchases, but buying a vehicle in 2026 is set to become costlier. At least nine automakers have announced price increases effective January, with hikes of up to 3% planned across segments.

Hyundai, Honda, Tata Motors, Renault, JSW MG Motor, Nissan, BYD, Mercedes-Benz and BMW have confirmed price revisions, while sources indicate several other manufacturers are also considering similar moves. The increases are being driven by rising input costs and the sustained depreciation of the Indian rupee against major global currencies.

Automakers say the planned hikes will partially offset the demand momentum created by the substantial GST reduction announced in September. January has traditionally been a period when carmakers raise prices to factor in cost escalations after clearing older inventory in December.

Tata Motors, India’s largest passenger vehicle maker, is sticking to this long-established practice.

“In January we will take the price increase which is typical of what we generally do. For the last nine months, we have not been able to, but with the commodity prices increase,  we need to pass it on,” said Shailesh Chandra, managing director and CEO of Tata Motors Passenger Vehicles, during an analyst call in November.

Hyundai Motor India announced on December 31 that it will implement a weighted average price hike of around 0.6% across its model range from January 1, 2026, citing higher costs of precious metals and commodities. Renault, which is preparing to reintroduce the Duster later in January, will raise prices by about 2%, while Honda confirmed a price revision without disclosing the extent of the increase.

Rupee Depreciations Hits Luxury Carmakers

Luxury carmakers are expected to feel the maximum impact as their business is heavily dependent on imports. Mercedes-Benz, India’s largest luxury car manufacturer, has capped its price hike at 2% while BMW, the second-largest player, will raise prices by up to 3%. BYD, another import-heavy brand, has also announced a price increase.

Currency movements have added to the pressure. Throughout 2025, the euro-rupee exchange rate has remained above the Rs 100 mark, with the spot rate touching Rs 105.49 on December 31. The rupee has also weakened against the Chinese yuan, raising costs for manufacturers that rely on China for electric vehicle battery cells and rare earth magnets.

India currently imports almost all its EV battery cells and rare earth magnets, making electric vehicle makers particularly vulnerable to currency fluctuations. Tesla imports the Model Y into India as a fully built unit from China, while BYD has confirmed it will hike prices of its Sealion 7 electric SUV in January 2026.

“Prices of certain commodities have risen sharply over the past few weeks but at the same time that of other commodities have remained stable. We have to see how much of this can be absorbed by us through internal cost reduction measures. (But) after a certain point the cost matrix will disallow any further absorption,” said a senior executive at one of India’s top four carmakers.

With manufacturers increasingly unable to absorb rising costs, consumers looking to buy a new car in the coming year may have to dig deeper into their pockets.