India’s automobile industry received a much-needed boost in demand following the rationalization of Goods and Services Tax (GST) in September last year, with auto sales marking significant growth since then. Industry leaders hailed GST 2.0 as a transformative structural reform.
One of the biggest beneficiaries of the tax overhaul has been the passenger vehicle industry, particularly the entry-level small car segment, as improved affordability drove more customers to the showrooms. The industry recorded growth of around 16% between September 2025 and March 2026.
Maruti Suzuki Sales Jump as Entry-Level Segment Nearly Doubles
India’s largest carmaker Maruti Suzuki saw its passenger vehicle sales grow about 36% on year during the April-August period this year, though on a low base, while its entry segment almost doubled with growth of over 96%,
Under the GST 2.0, rates on small passenger vehicles, two-wheelers up to 350 cc (nearly 90% of the segment sales), commercial vehicles and three-wheelers dropped to 18% from 28%, while larger cars and SUVs saw a cut of around 3-7 percentage points.
“Maruti Suzuki sincerely thanks Hon’ble Prime Minister, Shri Narendra Modi, and Hon’ble Finance Minister, Smt. Nirmala Sitharaman, for this transformative step. As India marches ahead towards Viksit Bharat, Maruti Suzuki rededicates itself to making India a global manufacturing powerhouse," said Maruti Suzuki MD and CEO Hisashi Takeuchi.
“When domestic industry catches scale and competitiveness, more global business automatically shifts to us, leading to more exports. Encouraged by this growth, we are accelerating our capex plans, which in turn will create a multiplier effect across the economy.”
Hyundai: 4 Lakh Monthly Wholesale Is the New Normal
Hyundai Motor India MD and CEO Tarun Garg said the 4 lakh-unit monthly wholesale mark has now become the new normal, with the tax reform being a significant catalyst for the industry.
“It is clearly evident that GST 2.0 reforms have enhanced affordability and accessibility for customers, enabling more Indian families to realise their aspiration of vehicle ownership. We believe these reforms have strengthened the foundations of the Indian automotive sector and will continue to support its long-term, sustainable growth,” Garg said.
Mahindra Reports 17% Growth in SUV Sales Post-GST 2.0
Anish Shah, Group CEO and MD of Mahindra Group, said Mahindra’s SUV sales have grown 17% after the tax rationalisation, while light commercial vehicles and tractors have grown 20%. He also noted that the impact of GST 2.0 extended across both urban and rural markets, with improved consumer sentiment and higher disposable incomes supporting spending.
“A simpler tax structure, lower transaction costs and greater predictability can improve competitiveness, support investment and strengthen supply chains across manufacturing, financial services, real estate, hospitality and technology,” he said.
FADA: Vehicle Retail Growth Nearly 4x Faster After GST 2.0
Sai Giridhar, President of FADA, said the impact of GST 2.0 was reflected in the strong growth in vehicle retail over its first year. Between October 2025 and August 2026, more than 3 crore vehicles were registered in India, marking nearly 20% year-on-year growth, compared with less than 5% growth in the corresponding period before the reform.
According to him, the reform has significantly accelerated the pace of growth in the automobile industry, with the rate of expansion in vehicle retail during the 11-month period being nearly four times higher than before GST 2.0 was implemented.