Demand at India’s top carmakers saw a sharp spike after cuts in goods and services tax (GST) rates late in September coincided with the Navratri to Diwali festive season sales when companies recorded double-digit growth.
The good news for the industry now is that there are early signs that the momentum will likely remain strong in the months and quarters ahead, top carmakers and industry veterans said.
Tata Motors Passenger Vehicles Ltd expects 7-8% growth in the industry’s sales between October and March this financial year. Maruti Suzuki expects passenger vehicle sales to grow by around 7% next financial year. Hyundai Motor India has guided for 5.2% CAGR in the growth of overall industry sales till financial year 2030.
This is substantially higher than earlier estimates. Car sales have been tepid since fiscal 2025 growing at 2% year-on-year. At the start of this fiscal, members of auto industry lobby group, Society of Indian Automobile Manufacturers (Siam) had expected slower growth of 1% to 2% in sales.
Moody’s Ratings had said in May that India’s car sales are likely to grow at a CAGR of 3.5% until 2030.
Siam now expects the post-September, healthy growth to be sustained as new customers buoyed by price cuts are likely to come into the market now.
“What you are seeing is that somebody who was already in the market had a certain budget. Possibly (that) person has upgraded to a higher-segment car or a more feature-rich variant,” Siam president, who is also the managing director of Tata Motors Passenger Vehicles, told reporters on 15 October. “The real GST 2.0 customer will start coming from now on.”
All Indian carmakers had passed on to customers GST rate cuts ranging from five to 10 percentage points leading to a substantial reduction in the prices of new cars. Maruti cut prices of vehicles by upto 24% with prices of the Alto small car dropping by over ₹1 lakh. Hyundai reduced the price of the Creta by up to ₹70,000. The price of the Tata Nexon came down by up to ₹1.25 lakh and that of Mahindra XUV3XO by up to ₹1.56 lakh.
Buoyancy continuing
Hyundai India’s chief operating officer (COO) and director Tarun Garg echoed the continuing growth sentiment.
“Looking ahead, we expect this buoyancy to sustain post festive. November marriage season is likely to further lift demand, while December—traditionally a strong month for retails—is expected to maintain the positive momentum,” he told Mint.
Investors have also turned bullish on the automobile sector due to high growth expectations, with Nifty Auto growing by 28% this financial year as against a 12% surge in benchmark Nifty index.
Between April and September this year, Siam data showed that passenger vehicle sales declined 1.4% to 2.05 million units. In September, the sales of cars picked up 4.4% to 372,458 as the GST rate cut came into effect along with the onset of the festive season. This, despite the fact that there were only nine days of post-cut sales in the month.
Since then, carmakers have reported a sharp increase in the number of consumers visiting showrooms and booking vehicles. As per Hyundai’s Garg, enquiries have increased 10% year-on-year, with over 18,000 customers enquiring daily.
“Bookings have been even stronger, averaging nearly 3,500 per day—a solid 17% growth over last year. Retail sales have surged at an even faster pace, up 30% YoY, with nearly 2,500 cars delivered daily,” the Hyundai COO said.
Smashing records
Similar observations are being shared by other carmakers, with industry no. 1 Maruti Suzuki reporting a surge in festive period sales aided by GST cuts.
“Since the day we announced reduced prices, we received 4.5 lakh bookings. Of these [bookings], 1 lakh bookings were for small car. Retail sales during the period were 3.25 lakh. It has broken all records for Maruti Suzuki with a growth of more than 50% over a similar period last year,” said senior executive officer, marketing and sales, Maruti Suzuki.
“This year, many customers are enthusiastically coming to buy vehicles because of the GST 2.0 magic,” he added.
Between Navratri and Diwali this year, Tata Motors Passenger Vehicles sold more than 100,000 cars to customers, a growth of more than 33% over the year-ago period. “We believe this performance sets the tone for the rest of the fiscal year, especially as we gear up for new launches this year, complemented by sustained customer enthusiasm,” managing director said on the performance of the company.
An analyst shared the enthusiasm of the carmakers. An industry expert suggested that economic growth indicators like GDP growth, low inflation and reduction in repo rates are all expected to help in further boosting auto sales along with the GST cuts.
“Some momentum will continue as a lot of bookings have happened in the festive season, and the sales numbers will show up when these vehicles are delivered. Economic factors also support momentum,” he said.
