RC Bhargava, non-executive chairman, Maruti Suzuki IndiaThe GST 2.0 rate cut reforms and the ongoing festive season have given a significant boost to the Indian passenger vehicle market, with sales expected to grow about 6 per cent in the second half of financial year 2025-26, according to RC Bhargava, non-executive chairman, Maruti Suzuki India.
He said that the industry’s recovery would be driven by a more balanced product mix across segments including hatchbacks, sedans, and SUVs.
“Many carmakers will now realise what the nature of the Indian car market truly is, and I expect some of them to revise their product mix,” said Bhargava during the company’s Q2 earnings call on Thursday.
He said that the GST rate reduction on small cars from 28 per cent plus cess to 18 per cent is expected to revive demand for compact models.
“The GST bonanza is going to reignite sub-four-meter demand among Indian customers,” Bhargava added.
Hyundai India’s domestic growth, meanwhile, continued to be led by its SUV portfolio, including popular models such as the Creta and Venue. However, Bhargava expects the new GST structure to shift momentum back towards smaller cars.
At present, 69 per cent of the company’s market share lies in the 18 per cent GST slab applicable to small cars. “I see that share going up gradually as small car sales increase,” said Bhargava.
Models such as the Tata Nexon, Tata Punch, Maruti Suzuki WagonR, Dzire, and Kia Sonet have already established themselves as key products for their respective companies, even before the tax cuts were implemented.
Models such as the Baleno, Swift, and Dzire currently have a waiting period of two to three weeks, reflecting strong demand post the GST reduction, added Partho Banerjee, Senior Executive Officer – Marketing and Sales, Maruti Suzuki India.
Maruti’s flexible plan
To cater to this surge, the company has enhanced manufacturing flexibility to switch production between small and large models based on demand. “Maruti itself will have to change. We have now become far more flexible in our manufacturing and can produce vehicles that customers actually demand,” said Bhargava. He further indicated that Maruti Suzuki would revise its long-term production and sales projections for FY31 upwards in light of the changing market trends. The company currently has around 2.5 lakh pending bookings, nearly 70 per cent of which fall under the 18 per cent GST category, signalling a clear consumer shift towards affordable, small cars.
