Maruti’s small cars are flying off the lots after GST cuts: Here’s why

Maruti Suzuki India Ltd (MSIL), the country's largest carmaker, has witnessed a remarkable surge in small car sales following the government’s Goods and Services Tax (GST) reforms, which reduced tax on small cars from 28% to 18%, effective from September 22, 2025. This tax cut has made small cars more affordable, triggering a strong buyer response during the festive season.

Chairman R.C. Bhargava highlighted a 30% year-on-year growth in small car retail sales in October, with nearly 400,000 units sold between September 22 and October 31—almost double compared to the same period last year. Bhargava emphasised that despite the increasing popularity of SUVs, India remains fundamentally a small car market driven by affordability rather than aspiration. Over 200 million two-wheeler owners, who use scooters out of necessity, aspire to upgrade to low-cost cars, boosting demand for compact vehicles like Maruti’s Swift, WagonR, and Baleno models.

Maruti Suzuki’s success in the small car segment is rooted in its long-standing focus on delivering affordable, fuel-efficient vehicles tailored to Indian consumers. The company is open to reconfiguring its product lineup to capitalise on the renewed interest in small cars, with entry models continuing to form the core of its business. Despite expanding its SUV portfolio—now contributing nearly 28% of sales—Maruti underscores that small cars will remain central to its strategy.

With GST reforms making small cars accessible to a wider consumer base and the festive demand surge, Maruti Suzuki is poised to sustain growth momentum. The company also expects exports to play a key role in driving overall sales and production growth in the coming years, reinforcing its leadership in India’s small car market.