Cars after the 2025 Budget: fewer petrol cars, more EVs, higher prices
Duties on petrol and diesel cars jumped from 45% to 100% and the EV rebate disappeared. Sales hit a record in 2025 thanks to a June rush, then slumped. What changed, what sells and what it means for buyers.
In short
The 2025-26 Budget raised customs and excise on imported petrol and diesel cars from 45% to 100%, raised registration fees on new vehicles by 30%, and abolished the Rs 200,000 rebate on electric cars and the 50% road-tax discount for EVs and hybrids.
Buyers rushed before the change: 4,401 registrations in June 2025, nearly double May. New car sales still set a fourth consecutive record in 2025: 18,082 units (+5.6%), then fell: January-February 2026 was 20% lower than a year earlier.
The market is going electric anyway: 2,449 EVs (+57.7%) and 14,225 hybrids were registered in 2025; Suzuki led the market with 26.7% of new cars, and Chinese maker BYD more than doubled its sales (+113.6%).
There were 756,673 registered vehicles in April 2026; the number of cars almost doubled between 2014 and 2025.
For buyers, a petrol car with the same import value can cost about 35-40% more, while running costs rose too: fuel is up 21% since February 2026.
What the 2025 Budget changed
The aim was twofold: raise revenue and slow the growth of the car fleet, which strains roads and the import bill. The changes took effect in June-July 2025.
Sales: a record year built on a rush
Buyers who could bring forward their purchase did so: registrations hit 4,401 in June 2025, nearly double May's level. That rush carried 2025 to a fourth consecutive record of 18,082 new cars. The second half was much weaker, and the slump continued into 2026: only 5,175 vehicles were registered in January-February, against 6,480 a year earlier (−20%).
What people are buying
Suzuki remains the market leader with 26.7% of new car sales in 2025, followed by Toyota and Kia. The fastest-growing is BYD: its sales rose 113.6% in 2025, taking it into the top ten with 2.6% of all new cars. BW Businessworld reports a BYD share of 14.2% in 2025 and 29.6% in early 2026 without stating the basis: most likely the electrified segment, where its affordable models compete.
Hybrids dominate the fuel-saving segment: 14,225 hybrid registrations in 2025, up from 12,087 in 2024 and about five times a decade earlier; Toyota and Honda account for most of them. Electric vehicles grew fastest of all, to 2,449 in 2025 (+57.7%), even after the rebate was abolished, as rising fuel prices and cheaper Chinese models changed the arithmetic.
Cars on the road
There were 756,673 registered vehicles in April 2026 (BW Businessworld): about six for every ten residents. The number of cars almost doubled from 173,954 in 2014 to 337,585 in March 2025 (6% a year), alongside about 128,000 dual-purpose vehicles and 124,000 motorcycles. More cars mean more congestion, more imported fuel and more pressure on the rupee, which is exactly what the 2025 duty increase tried to slow.
The 2026-27 Budget: smaller changes
This year's Budget left car duties unchanged but added several measures that affect owners: annual fees for old or personalised number plates (Rs 2,000 to Rs 25,000 a year), no road-tax renewal until traffic fines are paid, an excise exemption for parents of adults with disabilities who receive a carer's allowance, and an online process to transfer vehicle ownership. On public transport, the maximum age of buses will fall from 21 to 16 years over five years, with a framework for solar charging of electric buses.
What it means for your wallet
The price hike affects buying, running and selling a car.