Maruti Suzuki sees small car demand revival, hopes growth momentum to continue

Maruti Suzuki, the biggest car manufacturer in the Indian passenger vehicle market, has been witnessing a demand revival in the small car segment with the GST rate cut that kicked in right before the festive season, in late September. RC Bhargava, Chairman of Maruti Suzuki India Limited (MSIL), has said that the people who used to skip the market are coming back, which is propelling the growth in the segment. He also said that the GST reduction was a timely step.

The small cars now attract 18% GST, down from the previous 28% slab. Maruti Suzuki, along with other cars, has passed on the GST rate cut benefits to the consumers by reducing the ex-showroom pricing of its cars, including the small ones. Along with that, the festive season offers and discounts have also played key roles in boosting the demand and sales of the small cars of the brand. While speaking on this, Bhargava said that the mindset of the consumers has been changing as the affordability issue that impacted the demand and sales of the small cars for quite some time has become over. “Safe, convenient personal transportation will be more accessible with the GST cut. A lot of people want to buy small cars, and the perception in favour of bigger cars has proven to be incorrect,” he added.

Maruti Suzuki has also revealed that the company's record festive season sales were largely driven by small cars. In October, retail sales growth for the brand was 30%, and small cars played a key role in that. “Retail sales in the 18% GST slab are expected to grow significantly. It now contributes 69% to Maruti Suzuki's total sales, and it will become higher in the coming months. The second half of FY26 will see a significantly improved sales picture,” believes Bhargava.

Adding on this, Partho Banerjee, Senior Executive Officer, Marketing & Sales, MSIL, has said that post the GST rate cut, many two-wheeler owners have started visiting Maruti Suzuki showrooms to upgrade to passenger vehicles and small cars are their target products.

Maruti Suzuki believes that both hatchbacks and sedans, which were considered to be dying categories, will grow as long as the GST for these remains at 18%. Bhargava stated that the company currently has 350,000 bookings in its order book, and the majority are in the 18% GST class. He also said that if the market demand for small cars continues like this, Maruti Suzuki may think about introducing new models in the segment. “If market demand continues, we have to look upgradation of current small cars and maybe new models are on cards,” he added.