Maruti Suzuki Calls GST 2.0 'Transformative' As Small Car Demand Soars

As the GST 2.0 rationalisation marks its first anniversary on Tuesday, the automobile industry is pointing to strong sales growth as evidence of the reform's impact. Among the biggest beneficiaries has been Maruti Suzuki, which reported a sharp rise in demand, especially entry-level cars, following the tax overhaul. 

In a statement, Maruti Suzuki Managing Director and CEO Hisashi Takeuchi said the company's passenger vehicle sales grew about 36 per cent year-on-year during April-August 2026, while the entry-level segment recorded growth of over 96 per cent. According to Takeuchi, improved affordability resulting from the revised tax structure has helped bring personal mobility within reach of a larger section of consumers, underlining the importance of affordability in driving vehicle demand.

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Road Ahead

Maruti Suzuki's Hisashi Takeuchi said the company is accelerating its capital expenditure plans as improved affordability and stronger demand help the domestic auto industry achieve greater scale and competitiveness. According to Takeuchi, a more competitive manufacturing base can attract additional global business and boost exports, creating a wider multiplier effect across the economy.

He also described GST 2.0 as a transformative reform, thanking Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for the move, while reiterating Maruti Suzuki's commitment to supporting India's ambition of becoming a global manufacturing hub.

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Effect Of GST 2.0 On Automobiles:

The implementation of GST 2.0 brought significant changes to vehicle taxation in India, making cars more affordable across segments. Under the revised tax structure, small qualifying cars (under 4-metres, 1.2-litre petrol engine) now attract 18 per cent GST, down from the earlier 28 per cent plus cess, while large cars and SUVs are taxed at a flat 40 per cent following the removal of compensation cess. GST on electric vehicles remains unchanged at 5 per cent. 

The changes translated into ex-showroom price reductions of around 5 per cent to 20 per cent, helping boost consumer demand. As a result, auto retail sales witnessed a sharp uptick, with the industry recording nearly 20 per cent year-on-year growth following the rollout of the new tax regime.