From Maruti to Mahindra, top industry execs say GST 2.0 changed the demand equation

India's top carmaker Maruti Suzuki is looking to ramp-up capital expenditure, fueled by a surge in passenger vehicle demand after GST 2.0 rationalisation came into effect a year ago, Hisashi Takeuchi, MD and CEO of the company said on Tuesday.

Maruti Suzuki's passenger vehicle sales grew around 36% on-year between April to August 2026, while sales in its entry segment rose more-than 96% during the period, Takeuchi said.

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"A year ago, the landmark GST reform gave fresh impetus to India's growth journey. At Maruti Suzuki, passenger vehicle sales grew about 36 pc year-on-year during Apr-Aug'26. We are particularly encouraged by the entry segment's growth of over 96 per cent, where improved affordability has brought mobility closer to many more people," Takeuchi stated in a post on X.

He said this demonstrates the power of the Indian consumer and the importance of affordability.

"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," he added.

The demand revival has extended beyond passenger vehicles, with Mahindra & Mahindra seeing strong growth across SUVs, light commercial vehicles (LCVs) and tractors since the tax changes.

Rajesh Jejurikar, Executive Director and CEO, Auto and Farm Sector, Mahindra & Mahindra, said GST rationalisation had created clear momentum for the economy and supported demand across key categories, as per a PTI report from Tuesday.

“Since the changes, we have seen SUVs grow 17 per cent, while LCVs and tractors have grown around 20 per cent,” Jejurikar said, adding that part of the GST benefit had also helped absorb volatility in raw-material costs that could otherwise have added to inflation.

Mahindra is also 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, Jejurikar said.

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The GST changes, which took effect on September 22, 2025, shifted several mass-market vehicle categories from the 28% tax slab to 18%, including smaller petrol, LPG and CNG vehicles and diesel vehicles meeting specified engine and length limits.

The tax cut has since translated into stronger retail demand across the auto market, according to the Federation of Automobile Dealers Association (FADA).

FADA President Sai Giridhar said lower on-road prices had improved affordability and brought both first-time buyers and consumers who had postponed purchases back into the market, as per the report.

Between October 2025 and August 2026, auto retail crossed 3 crore units, with sales growing nearly 20% year-on-year, compared with less than 5% growth in the corresponding period before the reform, Giridhar said.

He said the strongest impact was visible in categories serving mass-market consumers, including small cars, commuter two-wheelers, tractors and commercial vehicles.

The industry has also recorded its strongest-ever months across several categories over the past year, while two-wheeler sales have returned to levels last seen in 2018, Giridhar said. Alternative-fuel vehicles have also overtaken petrol for the first time in passenger vehicles, while rural markets have begun to outpace urban India, he added.

At the same time, Giridhar flagged the pressure on manufacturers from global volatility in crude, commodities and currencies, even as the industry benefits from stronger demand.