Biggest tax cut in two decades set to ignite demand across segments, with sub-4m SUVs and first-time buyers expected to lead the charge
11 Sep 2025 | 3592 Views | By Darshan Nakhwa and Ketan Thakkar
Hyundai Motor India COO Tarun Garg believes the government’s GST 2.0 tax reform has set the stage for what could be one of the strongest festive seasons in recent memory, calling the coming months “a mayhem” for car sales.
The sharp GST reduction — 11–13% on small cars and ...
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Hyundai Motor India COO Tarun Garg believes the government’s GST 2.0 tax reform has set the stage for what could be one of the strongest festive seasons in recent memory, calling the coming months “a mayhem” for car sales.
The sharp GST reduction — 11–13% on small cars and 3–10% on larger models — is the steepest in two decades, coming just as the industry was staring at a slowdown. Between April and August FY25, passenger vehicle sales had slipped 2% year-on-year, raising fears of negative growth. But Garg expects the festive tailwinds to flip the script.
“From -2% in April–August, we should swing to +5% between September and March — a 7% turnaround,” he said, adding that the onset of Navratri, Diwali, and the wedding season would fuel the momentum.
The Hyundai COO underlined a “double engine” recovery: rural demand supported by good monsoons and MSPs, and urban demand boosted by improved sentiment and GST cuts. “Sentiment will be very positive — not only in the stock market but across consumers,” Garg said.
While upbeat about the immediate season, Garg cautioned against runaway expectations. “History is a good teacher — the sustainable CAGR for India remains 5–7%. But with GST 2.0, the festive season will be extraordinary.”
The festive season typically accounts for 25–30% of annual passenger vehicle sales in India. Consumers align big-ticket purchases with auspicious days like Navratri, Dhanteras and Diwali, boosting demand across metros, tier-2/3 towns and rural areas.
Hyundai is expanding capacity from 824,000 to nearly 1 million units with the addition of the Talegaon plant this October, ensuring supply for domestic and export markets. Exports have grown 12.5% this year, and their contribution jumped to 27% of revenues in Q1 FY26.
On electrification, Garg highlighted that EV penetration in India has climbed from 2.5% last year to 6% in August 2025, and it is likely to close with 5% penetration at the end of the year. “New products and charging infra are unlocking adoption,” he said.