Affordable Cars Under Rs 10L Account for 78% of Festive Sales
Rationalized GST rates and a surge in festive enthusiasm have significantly boosted demand in India’s automotive sector, particularly for vehicles priced under Rs 10 lakh. This trend has reached multi-year highs, driven by a wave of premiumization across the market. With the recent adjustments in tax slabs, affordability has improved, rekindling interest among budget-conscious consumers who had previously been affected by rising loan costs and frequent price hikes.
Impact of GST Restructuring on Car Sales
The restructuring of Goods and Services Tax (GST) has played a pivotal role in revitalizing the automotive market. The effective tax burden on small cars and compact SUVs has been reduced, leading to lower showroom prices. This change has resulted in increased foot traffic at dealerships. According to SBI Research, nearly 78% of all cars sold between September and October 2025 were priced below Rs 10 lakh. Notably, vehicles in the Rs 5 lakh to Rs 10 lakh range accounted for 64% of total sales, while the sub-Rs 5 lakh segment contributed an additional 14%. This data highlights the mass-market category’s resurgence, particularly during the festive season.
During the Navratri to Diwali period, the industry achieved remarkable sales figures, with one car sold every two seconds. However, dealers faced challenges in meeting delivery deadlines due to the overwhelming demand. Sales of sub-4 meter cars and SUVs increased from 1.7 lakh units in September to 2.2 lakh units in October, compared to the previous year’s figures of 1.8 lakh to 1.9 lakh units. This growth underscores the effectiveness of the GST cuts in stimulating consumer interest.
Shifts in Consumer Preferences
Maruti Suzuki, a key player in the mass-market segment, reported a significant shift towards smaller cars. During the 40-day festive window, the company recorded 5 lakh bookings and 4.1 lakh retail sales, nearly doubling last year’s figures. Of these, 2.5 lakh were small cars, indicating a growing preference for budget-friendly options. The contribution of small cars to overall retail sales rose from 16.7% in the pre-GST cut period to 20.5% afterward. Furthermore, bookings for models now falling under the 18% GST slab surged by 50%, demonstrating the direct correlation between tax reductions and consumer buying behavior.
Sales of small cars have seen over a 35% increase across various regions, solidifying their dominance in rural markets. Analysts have also observed a rising demand for higher-value vehicles in rural areas, reflecting similar trends in urban settings. In metropolitan areas, cars priced between Rs 15 lakh and Rs 20 lakh experienced a 26% year-on-year growth, while those exceeding Rs 20 lakh saw over a 40% increase.
Overall Market Trends and Future Outlook
The automotive market’s performance during the festive season indicates a robust appetite for both budget and premium vehicles. Premium cars priced above Rs 20 lakh recorded more than 40% volume growth, while models in the Rs 5 lakh to Rs 20 lakh range experienced a 15% to 20% increase year-on-year. The strong performance of small cars, coupled with the rising demand for higher-value options, suggests a dynamic shift in consumer preferences.
As the industry continues to adapt to changing market conditions, the impact of GST restructuring remains a focal point for growth. The positive sales trends during the festive season may set the stage for sustained demand in the coming months. With the automotive sector showing resilience and adaptability, stakeholders are optimistic about future developments in this vital segment of the economy.
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