Selling Your Car: Why You Should Act Before Resale Values Decline Due to GST Reforms

If you’ve been thinking about selling your car, there’s no better time than now. India’s GST Council has just approved a sweeping auto tax overhaul that takes effect on September 22, 2025. At first glance, this may look like good news for buyers of new cars, but for used-car owners like you, it could mean shrinking resale values in the months ahead.

So, why the rush? Let’s break it down step by step.

What the 2025 GST Reform Means for Cars

The 56th GST Council meeting simplified India’s auto tax system into just two main brackets for cars (apart from the 5% rate for EVs):

• 18% GST → Small cars under 4 meters with engines less than 1200cc (petrol) or 1500cc (diesel) of displacement.
   
• 40% GST → Larger cars, SUVs, and luxury vehicles.
   

This is a big shift from the earlier 28% slab with additional compensation cess that made taxes complicated and often pushed effective rates up to 50%. Now, the cess has been removed, and taxation is more straightforward.

Industry estimates suggest that small hatchbacks and sub-compact cars could get 10–12% cheaper after September 22, thanks to the lower tax burden. Media reports also highlight that dealers are preparing to adjust their sticker prices ahead of Diwali 2025, when festive demand peaks.

So yes, new cars are about to get cheaper, and that’s where the impact on you as a seller begins.

Why Cheaper New Cars Can Hurt Used-Car Prices

Used-car values don’t exist in isolation. They are closely linked to the pricing of new cars. Here’s how:

1. Price Benchmarks Shift Downward

    

When a brand-new hatchback suddenly costs ₹50,000 less, why would a buyer pay yesterday’s higher rate for a one-year-old version? Used-car prices are benchmarked against new-car sticker prices. If new falls, old must follow.

 2. Dealers Adjust With Lag, But They Do Adjust

Experts note that the adjustment won’t be instant or one-to-one. Dealers factor in refurbishing costs, platform fees, and margins. But in practical terms, a 5–10% correction in used-car prices is likely over the next year in affected segments.

For example:
 

• On a ₹3 lakh car, a 5% drop is ₹15,000 lost.
   
• On a ₹7 lakh SUV, a 7% dip could wipe out ₹50,000 or more.
   

That’s money you save simply by selling before the GST change kicks in.
 

3. More Supply Floods the Market

With new cars becoming more affordable, more owners will trade in their old cars. That increased supply of used vehicles means tougher competition for your listing. When supply rises faster than demand, prices soften.

4. Buyers May Prefer New
 

If the price gap between a fresh showroom model and a one-year-old car narrows, many buyers will lean toward the new option. That puts further pressure on resale values.
 

In short: the GST reform doesn’t directly tax your used car, but it indirectly lowers what you can expect to get for it.

Why Selling Now Makes Sense

If you sell your used car before the GST reforms kick in, you:

• Lock in today’s higher resale values.
   
• Avoid competing with a flood of trade-ins. Once Diwali buying begins, many new cars will enter the market, pushing supply of used cars up.
   
• Stay ahead of market psychology. Even before price changes materialize, buyers may start expecting discounts on used cars after September, making negotiations tougher.
   

Waiting even a few months could mean settling for less money for the same car. 

A Common Question: Should You Just Buy a New Car Instead?

You may be wondering: If new cars are getting cheaper, should I just buy one and forget about selling?

The answer depends on your situation, but here’s a smart approach:

• Sell first, then buy. That way, you maximize your current car’s value before it dips, and then use the proceeds to take advantage of GST-adjusted new car prices.
   
• Avoid overlap costs. Holding on to your old car while waiting for new deals means paying for insurance, maintenance, and depreciation—all while its value declines.
   

By selling now and timing your purchase later, you stay financially ahead.

Why Choose Cars24 to Sell Now?

Here’s how Cars24 makes it simple:

1. Instant Valuation → Get a free, AI-powered used car valuation in minutes.
    
2. Widest Dealer Network → Access 10,000+ verified buyers competing to offer you the best price.
    
3. Hassle-Free Sale → We handle paperwork, RC transfer, and payment so you don’t have to.
    
4. Same-Day Payment → Once your deal is finalized, the money is transferred directly to your account.
    

Our mission has always been to ensure you don’t just sell your car, but sell it smart, at the right time, for the best price, all of that while ensuring the fastest and most secure sale. And right now, timing is everything.