Benefiting from GST reduction, auto sector sets record, 3 crore vehicles sold in 11 months

Last year, the government reduced the rate of GST. The effect of which is now being clearly seen in the auto sector of the country. The sale of cheap vehicles has increased after the tax relief. If we look at the figures, there has been a jump of 20 percent in vehicle sales since then. Due to which the backward auto sector has once again got a life belt. Due to fall in vehicle prices, purchases of both passenger vehicles (cars) and two-wheelers (bike-scooters) have increased rapidly.

Auto industry veterans believe that the relaxation in GST rates has eased the burden on consumers’ pockets and increased customer traffic in showrooms. The tax cut comes at a time when buyers were waiting for a softening in prices. According to experts, this 20 percent increase in sales is not only a big relief for auto manufacturers, but is also a direct indication of strength in the country’s economy and consumer spending. Let’s try to understand it in detail…

Maruti Suzuki jumped over 96 percent

According to top auto industry executives, vehicle sales in India have increased by 20% to 3 crore vehicles in the last 11 months. This is because the GST rate cut is making cars cheaper and car buyers are coming back to showrooms for the first time. The change comes after the implementation of GST 2.0 reforms a year ago, which reduced tax rates on all types of vehicles and revived demand in both urban and rural markets.

At Maruti Suzuki, passenger vehicle sales grew nearly 36% year-on-year between April and August 2026, with the entry-level segment witnessing a surge of over 96%. Hisashi Takeuchi, Managing Director and CEO, Maruti Suzuki India Limited, said this points to the strength of Indian consumers and the importance of vehicles being affordable. He further said that the company is accelerating its capital expenditure (Capex) plan, which is expected to have a “multiplier effect on the entire economy”.

Wholesale sales of more than 4 lakh units per month

Hyundai Motor India also echoed this trend. Tarun Garg, MD and CEO of HMIL said that the GST 2.0 reforms have proved to be a big game changer for the Indian automotive industry. He said wholesale sales of over 4 lakh units per month has now become the “new normal”. Garg further said that between September 2025 and March 2026, passenger vehicle sales grew by over 15 per cent annually and the pace increased to over 29 per cent in the next five months.

Alternative-fuel vehicles overtake petrol models

According to data from the Federation of Automobile Dealers Association (FADA), more than 3 crore vehicles are registered in Indian auto retail. The increase is around 20 percent year-on-year, compared to less than 5 percent in the same year before the reform. FADA President Sai Girdhar said two-wheeler sales have reached 2018 levels, alternative-fuel vehicles have overtaken petrol models in the passenger segment for the first time and rural markets are now overtaking urban markets. Better affordability, he said, “has not only increased demand, but also broadened the scope of the market.”

17 percent increase in SUV sales

Its impact was not limited to passenger vehicles. Mahindra Group Group CEO and MD Anish Shah said that after the changes, sales of SUVs increased by 17 per cent, while sales of light commercial vehicles and tractors increased by 20 per cent. He further said that the reforms have boosted loan disbursements at Mahindra Finance and also increased discretionary spending by people in the group’s hospitality, real estate and logistics businesses.

Shah said, GST 2.0 shows that structural reforms, when combined with strong consumer demand and business investment, can create a virtuous cycle of affordability, consumption, investment and growth. However, officials warned that despite growing domestic demand, manufacturers themselves are facing cost pressures from global commodity and currency fluctuations.