In driver's seat: First-time buyers rev up sales as tax cut makes cars affordable

New Delhi: The share of first-time buyers at the country's leading carmakers Maruti Suzuki and Hyundai rose after recent tax cuts, which had led companies to drop prices, boosting affordability, and helping draw a fresh set of customers.

"Over the last several years, the contribution of first-time buyers (at Maruti Suzuki) had been gradually moderating, but the recent policy intervention has reversed that trend decisively," said Partho Banerjee, senior executive officer, marketing and sales, at Maruti Suzuki. "This is the first time in almost five years that the contribution of first-time car buyers has risen meaningfully."

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The share of first-time buyers in total sales at Maruti Suzuki, which boasts the biggest lineup of entry-level cars in the Indian market, stood at 40% in FY25 and 45% in FY22. This figure touched 48% between September 2025 and February 2026.

It marked a 6-7 percentage point rise from April-August 2025 prior to the government cutting the goods and services tax (GST) on cars with effect from September 22.

Hyundai too saw the share of first-time buyers in total sales increase by 2.1 percentage points to 41.8% between September and December 2025, compared to the pre-GST period.

At Tata Motors, first-time buyers increased their share in total sales of compact SUVs like Nexon and Punch by as much as five percentage points post the GST cut. In Hyundai too, the share of first-time buyers in sales of compact SUV model Venue rose to 47% post the GST cuts from 44% in January-August 2025. In midsize SUV, Creta, the percentage of first-time buyers in sales increased to 34% in September-December 2025, from 31% earlier in the year.

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Tarun Garg, managing director and chief executive officer, Hyundai Motor India (HMIL) said the tax reset not only streamlined taxation but also significantly improved affordability and accessibility for customers. "At HMIL, we have witnessed a positive shift in consumer sentiment post this reform, reflected in a rise in first-time buyers to 41.8% in the September-December 2025 period from 39.7% during January-August 2025," he said. "This clearly indicates growing confidence among new customers entering the market."

The government reduced GST on cars measuring less than four metres in length to 18% from 29-31%. Those exceeding four metres attract a tax rate of 40%, compared to 43-50% earlier.

Companies adjusted prices to pass on the benefits of the lowered taxes. Sales of cars in the 18% GST slab increased by 24% after the GST cut, showed data available with Maruti Suzuki. The company is also seeing a significant surge in two-wheeler upgraders entering the car segment.

Banerjee said Maruti is seeing clear signs of stabilisation and recovery in the entry segment. "Over half-51%-of our new customers post-GST are upgrading from two-wheelers," he said. "This is a very strong indicator of improving affordability and rising aspirations."