Rationalised GST rates and buoyant festive sentiment have propelled demand in the industry’s ‘bread-and-butter’ sub-₹10 lakh segment to multi-year highs, amid an ongoing premiumisation wave in the country.
The reset in tax slabs – particularly for small cars and compact SUVs – widened affordability and revived interest among price-conscious buyers who had been squeezed by rising loan costs and frequent model price hikes.
According to SBI Research, nearly 78 per cent of all cars sold in Sept-Oct 2025 were priced below ₹10 lakh, underscoring the renewed strength of the mass-market category. Vehicles in the ₹5 lakh to ₹10 lakh bracket accounted for 64 per cent of total sales, while the sub-₹5 lakh category contributed another 14 per cent, firmly establishing the budget segment as the backbone of festive demand.
“The period from Navratri to Diwali saw the industry selling one car every 2 seconds even as dealers struggled to meet vehicle delivery deadlines,” it pointed out.
Industry representatives attribute the surge to GST restructuring, which lowered the effective tax burden on small cars and compact SUVs. The tax cuts translated into lower showroom prices and boosted dealership footfalls. SIAM data shows sales of sub-4 metre cars and SUVs rose from 1.7 lakh units in Sept 2025 to 2.2 lakh units in October, compared with 1.8 lakh to 1.9 lakh units during the same period last year.
Maruti Suzuki, which has the widest mass-market portfolio, saw a sharp shift toward smaller cars. Of the 5 lakh bookings and 4.1 lakh retail sales recorded during the 40-day window – almost double last year’s festive-period levels – 2.5 lakh were small cars. The contribution of small cars to overall retail sales rose from 16.7 per cent in April-Oct (pre-GST cut) to 20.5 per cent afterward. Bookings for models now under the 18 per cent GST slab jumped 50 per cent, reflecting the direct impact of lower taxes on buying behaviour.
Small-car sales grew over 35 per cent across regions, maintaining their stronghold in rural India. Analysts also noted rising rural demand for higher-value cars, mirroring trends in urban markets. In metro cities, models priced between ₹15 lakh and ₹20 lakh grew 26 per cent year-on-year, while those above ₹20 lakh recorded over 40 per cent growth.
Premium cars priced above ₹20 lakh posted more than 40 per cent volume growth, underscoring the rising appetite for high-value vehicles. Models in the ₹5 lakh to ₹20 lakh range grew 15 per cent-20 per cent year-on-year, while small cars registered over 35% growth during the festive period.
