By T. Murrali
India’s passenger vehicle market is witnessing a strong revival in small-car demand following the government’s decision to reduce GST on compact cars.
Maruti Suzuki India Ltd reported its Q2 (July–September) FY 2025-26 results with domestic wholesales dipping 5.1% to 440,387 units, as customers postponed purchases ahead of the GST reduction announcement on September 22. Despite the temporary slowdown, exports surged 42.2% to 110,487 units, the highest ever in a single quarter, pushing total quarterly sales volumes up 1.7% to 550,874 units.
The company recorded its highest-ever quarterly net sales at ₹ 401,359 million, compared to ₹ 355,891 million in the previous year. Net profit rose 7.3% year-on-year to ₹ 32,931 million.
For H1 (April–September) FY 2025-26, Maruti sold 1,078,735 units, including an all-time high half-year export volume of 207,459 units, driven by a robust 39.9% export growth. Half-year net sales also touched a new record at ₹ 767,606 million, with net profit rising to ₹ 70,048 million.
The company said exports are now a strategic contributor to profitability, as demand continues to grow across over 100 global markets.
According to the company the tax revision has “completely changed customer sentiment” and brought price-sensitive buyers back to showrooms. Mr R.C. Bhargava, Chairman, Maruti Suzuki, said the move reflects the government’s awareness of how rising car prices had hit middle-class buyers and slowed manufacturing and employment growth. He noted that people who had postponed purchases are returning to the market, boosting retail demand beyond festival-season factors. He said lower taxes on small cars will benefit affordability, spur production, and eventually increase tax revenues through higher volumes—offering “long-term gains for the industry and the economy.”
Maruti Suzuki’s Senior Executive Officer for Marketing and Sales, Mr. Partho Banerje, said, post the GST cut, the share of entry-level models in Maruti’s retail mix has risen from 16.7% to 20.5%. Demand is particularly strong in Tier-2 and Tier-3 markets, where bookings now contribute nearly 65%, compared to 50% in the top 100 cities. Dealerships report an increasing number of two-wheeler customers upgrading to four-wheelers, aided by new financing schemes, he added.
With demand rising sharply, the vehicle maker currently has close to two lakh pending bookings. “Production plants are operating on Sundays to shorten waiting periods, especially for high-volume models like Baleno, Swift and the small-car portfolio,” he said.
Mr. Bhargava pointed out that the company expects the second half of the fiscal to show around 6% industry growth, reversing the earlier decline. “Maruti also reported strong export performance and expects to cross 400,000 units this year, maintaining its position as India’s largest car exporter. We have already crossed 200,000 cars in the first half. We have started exporting the first E car which we produced,” he added.
The company is finalising plans for a fifth manufacturing plant and continues to expand distribution in rural markets, having added more than 500 touchpoints in the past 18 months.
New Wave Triggered by Technology
Despite the surge in demand for entry-level cars, the shift is not merely about price. Customers are choosing new technologies as well—underbody CNG options have already registered approximately 11,000 bookings, and nearly 16% of bookings are for ADAS-equipped variants. The adoption of these features shows that consumers now seek both value and modernity, Mr. Banerje mentioned.
Compact cars still anchor India
The GST reform has done more than boost sales. It has reminded the industry and consumers that small cars remain the backbone of personal mobility in India. For Maruti Suzuki, the policy has validated its core belief: in a country of rising aspirations, the first car continues to matter.
The coming months will test whether this surge becomes a sustained trend. But for now, the message from showrooms across the country is clear. India still wants small cars, the market is roaring back to life, and the industry has regained its confidence. And this time, the acceleration is coming from the bottom of the pyramid upwards.
