Maruti Suzuki expects a 10% increase in small car sales following the rollout of GST 2.0, which reduces GST rates on small cars from 28–31% to 18%. This tax reduction is anticipated to revive demand in the mass-market segment, where Maruti holds a dominant position.
Impact of GST 2.0 on Small Car Sales
- Effective Price Reduction: On-road prices for small cars will drop by 6–8%, improving affordability.
- Segment Significance: Small cars account for around 70% of Maruti Suzuki’s overall sales, making this reform especially impactful.
- Recovery Catalyst: The automaker faced volume declines in Q1 FY26, with Mini segment sales down 6% YoY (19,522 units) and Compact cars down 6.3%.
Market Timing & Demand Outlook
- Festive Season Advantage: The GST cut arrives just ahead of the festive season, likely boosting showroom footfall, new bookings, and conversion rates for entry-level models such as Alto, Celerio, and Wagon-R.
- Renewed Consumer Interest: The pricing benefit is expected to attract price-sensitive buyers and stimulate demand.
Stock Performance & Sales Trends
- Stock Surge: Maruti Suzuki shares have risen 20% in the past month, closing at ₹14,903 on NSE as of September 5, 2025, outperforming the broader Nifty Auto index.
- Sales Recovery Potential: FY24–25 small car sales declined 9%, but Q1 FY26 domestic sales totaled 4,30,889 units, down 5% YoY. GST 2.0 is expected to help reverse this trend starting September 22, 2025.
Summary
The GST 2.0 reform is set to act as a catalyst for India’s affordable car market, particularly benefiting Maruti Suzuki’s small car segment. With its market dominance, strategic timing ahead of the festive season, and anticipated price reductions, Maruti is well-positioned to capitalize on renewed consumer demand and sales growth.
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