GST Slash Fuels Surge in Small Car Sales Amid New Market Dynamics

In a significant market shift, the reduction in GST rates has sparked a resurgence in small car sales, challenging the belief that Indian consumers had moved toward larger, more luxurious vehicles. Maruti Suzuki India Chairman R C Bhargava highlighted the trend during an earnings call on Friday.

The company, which has seen record retail sales propelled by small cars during the festive period, is poised to adjust its production mix to align with consumer demand. Bhargava outlined the impact of the GST cut—lowered to 18% for smaller vehicles—as a crucial factor driving the 30% growth in this segment.

Anticipating further demands, Maruti Suzuki is nearing a decision on establishing its fifth manufacturing plant, with details expected in the coming months. With a current market share of 69% in the small car category, Maruti forecasts a continued rise in this sector, projecting significant long-term shifts in production and sales strategies.