How Festive Demand is Reshaping India’s Auto Sector

India’s automotive sector is witnessing a pivotal festive season, shaped by evolving consumer preferences, policy reforms, and digital transformation. A recent pan-India survey conducted by Grant Thornton Bharat, covering over 2,800 respondents across digital platforms and age groups, provides valuable insights into the factors influencing vehicle purchases this year.

The findings offer a strategic view into how affordability, safety, premiumisation, and technology are driving consumer decisions— and how these shifts are redefining the festive auto market.

The festive season has traditionally been a high-sales period, but this year it marks a deeper transformation. The rollout of GST 2.0 has significantly altered the affordability landscape. With tax rates on small cars reduced from 28% to 18%, and a simplified 40% slab for larger vehicles, acquisition costs have dropped across vehicle categories.

This has reignited interest in entry-level vehicles, particularly in Tier 2 and Tier 3 cities where price sensitivity remains high. The survey reveals that nearly 72% of respondents had deferred their purchase decisions in anticipation of these reforms.

Consumer preferences are also shifting in favour of hybrid vehicles, which emerged as the most preferred fuel category in the survey, ahead of petrol and EVs. 38% of respondents prefer hybrid vehicles, outpacing petrol (30%) and EVs (21%),signaling a clear consumer shift towards transitional, fuel-efficient technologies. While EVs continue to face infrastructure and range challenges, hybrids offer a practical alternative, especially in semi-urban and rural markets.

State-level incentives, such as road tax waivers in certain states, have further boosted hybrid adoption. OEMs are responding strategically, with over 15 hybrid models launched in the past year and around 8 models lined up for launch by March 2026.

Urban consumers are redefining value in vehicle purchases. The survey shows that over 65% of respondents are willing to pay a 10–15% premium for high-end variants, with a significant portion open to stretching their budgets even further. This appetite for premiumisation is driven by rising disposable incomes, stable interest rates translating into seamless vehicle financing, and a desire for enhanced features and aesthetics.

Vehicles are increasingly seen as lifestyle statements, and OEMs are responding with differentiated trims, luxury interiors, and connected car features that cater to this aspirational mindset.

Safety and technology have become central to the purchase decision. For the first time, safety has overtaken price and mileage as the top consideration for buyers, cited by 34% of survey respondents. Regulatory mandates like six airbags, ABS, and Bharat NCAP crash ratings have elevated consumer awareness. Simultaneously, tech integration—ranging from infotainment systems to smart interfaces—is now a baseline expectation.

Consumers are actively comparing models based on their digital capabilities, and OEMs are embedding advanced tech even in mid-range variants. This reflects a broader lifestyle shift, where digital fluency and smart living are influencing purchase behaviour across categories.

The way consumers discover and buy vehicles is also changing. Digital platforms have become central to the customer journey, with social media, car apps, and automotive websites playing a key role in model discovery and comparison. The survey highlights that 52% of respondents use both online and offline channels before making a purchase, indicating a blended buying journey. While digital research drives initial interest, physical dealership visits remain essential for validation through test drives and in-person interactions. This hybrid behaviour demands an omnichannel strategy from OEMs, ensuring seamless integration between digital engagement and physical execution.

Financing continues to be a critical enabler of demand. With stable interest rates and rising disposable incomes, consumers are more confident about upgrading their vehicles. A majority prefer a mix of loans and self-funding, supported by easy processing and flexible repayment options. The availability of green car loans and EV-specific financing products is further supporting the shift toward sustainable mobility. In rural markets, digital lending platforms are enhancing accessibility, making vehicle ownership more inclusive.

Interestingly, alternative ownership models like leasing and subscriptions are gaining traction. While traditional ownership still dominates, 37% of consumers surveyed are actively considering flexible options that offer relief from upfront costs and long- term commitments. These models are particularly attractive to urban professionals and fleet users and align with the broader trend of mobility-as-a-service. OEMs and financial service providers have an opportunity to educate consumers, simplify onboarding, and bundle value-added services to make these models more mainstream.