GST cuts drive 20% surge in auto sales, industry leaders say

New Delhi: Auto retail sales in India jumped 20% to 3 crore vehicles in the last 11 months as GST rate cuts widened affordability and pulled first-time buyers back to showrooms, top auto industry executives said.

The turnaround follows the rollout of GST 2.0 reforms a year ago, which lowered tax rates across vehicle categories and reset demand across urban and rural markets alike.

At Maruti Suzuki, passenger vehicle sales grew nearly 36% year-on-year between April and August 2026, with the entry-level segment surging over 96%. "This demonstrates the power of the Indian consumer and the importance of affordability," said Hisashi Takeuchi, Managing Director & CEO, Maruti Suzuki India Limited, adding that the company is accelerating capex plans, with a "multiplier effect across the economy" expected to follow.


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Hyundai Motor India echoed the trend. "The GST 2.0 reforms have been a significant catalyst for the Indian automotive industry," said Tarun Garg, MD & CEO, HMIL, noting that monthly wholesale volumes of over 4 lakh units have become "the new normal." The passenger vehicle sales posted year-on-year growth of over 15% between September 2025 and March 2026, accelerating to more than 29% in the following five months, Garg added.

As per data from the Federation of Automobile Dealers Associations (FADA) Indian auto retail has registered over 3 crore vehicles, growing nearly 20% year-on-year, against under 5% in the comparable year before the reform. FADA President Sai Giridhar said that two-wheeler sales have hit levels last seen in 2018, alternative-fuel vehicles have overtaken petrol models in the passenger segment for the first time, and rural markets are now outpacing urban ones. Improved affordability, he said, "did not merely pull demand forward; it widened the market itself."

The impact has extended well beyond passenger vehicles. Anish Shah, Group CEO & MD, Mahindra Group, said SUV sales have grown 17% since the rationalisation, while light commercial vehicles and tractors have risen 20%. He added that the reform has lifted disbursements at Mahindra Finance and boosted discretionary spending across the group's hospitality, real estate and logistics businesses. "GST 2.0 demonstrates how structural reforms, when combined with strong consumer demand and business investment, can create a virtuous cycle of affordability, consumption, investment and growth," Shah said.

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Executives, though, cautioned that manufacturers continue to absorb cost pressures from global commodity and currency volatility even as domestic demand has strengthened.