‘Post-GST Growth in Sedans and Hatches Not Really a Sustainable Trend’: Hyundai Motor’s Tarun Garg

The recent rebound in India’s hatchback and sedan segments following the GST rate rationalisation may not represent a long-term structural shift, according to Tarun Garg, Managing Director and Chief Executive Officer of Hyundai Motor India. Speaking about changing market dynamics after the GST revision in September 2025, Garg said the recent growth across body styles has improved overall industry sentiment and plant utilisation, but SUVs are expected to continue dominating the market going forward.

“So, before GST reform, the mix was heavily skewed in favor of only cars more than 4 meters but now we are seeing a growth across segments. But I don’t think this is a trend as such. We’re going to introduce two new models this year which are both going to be SUVs,” Garg said.

The comments come at a time when passenger vehicle demand has shown signs of revival after a weak first half of FY26. According to data from JATO Dynamics, hatchback sales rose 20% year-on-year in the October-December quarter of 2025, while the sedan segment posted a sharp recovery led by the strong performance of the Maruti Suzuki Dzire. The sedan recorded 33.18% year-on-year growth in October 2025 alone and eventually emerged as India’s best-selling car in FY26 with sales of 2,29,130 units.

Hyundai said the first half of the year remained subdued due to weak consumer sentiment, while the second half witnessed a strong turnaround after GST rationalisation improved affordability and boosted demand.

“GST rate rationalization in September acted as a strong catalyst for recovery. This shift coincided well with the commissioning of our new plant and product launch cycle kicking in. Together, these factors created strong leverage and allowed us to respond to the improving demand environment, supporting a steady acceleration in the latter half of the year,” he said. 

Hyundai Motor India on Wednesday posted its highest-ever quarterly domestic sales at 1,66,578 units for the fourth quarter of FY26, up 8.5% compared to the same quarter last year. He added, “So, obviously this is very good from the overall plant capacity utilization point of view and from a growth point of view. We are very happy as long as the overall volumes keep on increasing.” 

The company said refreshed versions of the Hyundai Exter and Hyundai Verna are expected to support further momentum in the coming quarters. Looking ahead, Hyundai plans to introduce two new nameplates in FY27, including its first locally developed dedicated electric compact SUV.

“We feel very excited to inform you that during this financial year, we shall be introducing two completely new nameplates which have been keenly awaited by all of you. Both these launches are expected to meaningfully boost our volumes and act as powerful catalysts for our next phase of growth,” Garg said.

“Of these two new launches, one will mark the debut of our new localized dedicated EV in the compact SUV space, accelerating our transition towards electrification and strengthening our future-ready portfolio,” he added.

The second launch will expand Hyundai’s internal combustion engine SUV portfolio in the mid-size SUV category. According to the company, both launches are aimed at strengthening its presence in high-demand segments. Hyundai said it expects domestic volume growth of 8-10% in FY27, supported by new launches, increased production flexibility and stronger market sentiment following GST cuts. The company said the strongest demand growth is currently visible in the mid-SUV, Hyundai Venue and Hyundai Aura segments. Garg also flagged macroeconomic uncertainties arising from geopolitical tensions in West Asia, particularly around oil prices, supply chains and consumer sentiment.

“We know that there are some uncertainties because of the Middle East war. What will happen once the war ends? How will it affect the supply chain? How will it affect the sentiment? How will it affect oil prices, petrol prices? So, there are uncertainties, we don't know. But the good thing is, post GST, we are seeing a strong traction in demand,” he adds.