Car market leader Maruti Suzuki India is calling the GST 2.0 reform a 'transformative' change for the Indian automobile industry, as the company's passenger vehicle sales grew about 36 per cent year-on-year during April-August 2026. The company's Managing Director and CEO Hisashi Takeuchi described the reform as a landmark that has given fresh impetus to India's growth journey, with the improved affordability bringing personal mobility within reach of a larger section of consumers. Takeuchi thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for the transformative move, while reiterating Maruti Suzuki's commitment to supporting India's ambition of becoming a global manufacturing hub.
The entry-level passenger vehicle segment — which had experienced years of sluggish growth due to escalating vehicle prices and regulatory compliance costs — emerged as the primary beneficiary of the revised rates. With GST on qualifying compact and small passenger cars reduced under the reform, lower on-road prices and reduced financing hurdles allowed first-time car buyers to return to the market in volumes not seen in recent years. Takeuchi noted that the near-doubling of sales in the entry category underscores the fundamental role price-to-value propositions play in expanding India's automotive footprint. The reform did not merely pull demand forward but widened the market itself, bringing first-time and long-deferred buyers back onto the showroom floor. According to PTI, FADA President Sai Giridhar noted that 'lower on-road prices had improved affordability and brought both first-time buyers and consumers who had postponed purchases back into the market.'
The GST Council had approved changes to the tax structure effective September 22, 2025, with petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length moved to the 18 per cent rate from 28 per cent. According to Business Standard, Mahindra & Mahindra Executive Director & CEO Rajesh Jejurikar noted that since the changes, SUVs have grown 17 per cent, while LCVs and tractors have grown around 20 per cent. The Federation of Automobile Dealers Association (FADA) President Sai Giridhar reported that Indian auto retail has registered over 3 crore vehicles in the eleven months since GST 2.0 took effect, growing nearly 20 per cent year-on-year. As per PTI, Jejurikar added that 'part of the GST benefit had also helped absorb volatility in raw-material costs that could otherwise have added to inflation.'
Takeuchi emphasized that when domestic industry catches scale and competitiveness, more global business automatically shifts to India, leading to more exports. As reported by Business Standard, he stated that encouraged by this growth, the company is accelerating its capex plans, which in turn will create a multiplier effect across the economy. The CEO noted that when domestic industry catches scale and competitiveness, more global business automatically shifts to us, leading to more exports. This strategic approach reflects the company's confidence in sustained demand growth following the GST reform implementation. Beyond domestic expansion, the scale and cost competitiveness unlocked by the domestic volume rebound are expected to bolster export capabilities, with the company rededicating itself to supporting the Make in India initiative. According to PTI, Jejurikar also announced that Mahindra is 'expanding its electric-vehicle capacity, with the company planning to add 4,000 units of capacity by March 2027 as it expects the EV segment to grow further.'
The industry has recorded its strongest-ever months across several categories over the past year, with two-wheeler sales returning to levels last seen in 2018, as reported by PTI. Alternative-fuel vehicles have also overtaken petrol for the first time in passenger vehicles, while rural markets have begun to outpace urban India. However, Giridhar flagged pressure on manufacturers from global volatility in crude, commodities and currencies, even as the industry benefits from stronger demand. The GST changes have translated into stronger retail demand across the auto market, with the strongest impact visible in categories serving mass-market consumers, including small cars, commuter two-wheelers, tractors and commercial vehicles. Between October 2025 and August 2026, auto retail crossed 3 crore units, with sales growing nearly 20 per cent year-on-year, compared with less than 5 per cent growth in the corresponding period before the reform. The implementation of GST 2.0 brought significant changes to vehicle taxation, making cars more affordable across segments with ex-showroom price reductions of around 5 per cent to 20 per cent.
