GST cuts spark SUV sales boom, small cars struggle

The trend comes amid an intensifying tussle over emission norms for small cars

- Ayaan Kartik

SMALL ISN'T BIG IN Oct-Nov, small car sales grew just 3% y-o-y to 22,415 units IN contrast, compact SUV sales grew 17% to 207,180 units BOTH numbers reversed drop seen in FY26's first half

Hopes that a landmark cut in federal taxes would provide a lifeline to struggling small cars like Maruti Alto, S presso and Renault Kwid have been dashed, with latest sales data showing buyers continuing to favour bigger, more expensive vehicles.

The trends come in the backdrop of an intensifying tussle between carmakers over policy support for small cars under upcoming emission norms.

In October-November, data released on Friday by the Society of Indian Automobile Manufacturers (Siam) showed that mini cars cumulatively grew just 3% year-on-year (yo-y) to 22,415 units, compared to 17% (to 207,180 units) for compact SUVs of less than 4 metre length.

To be sure, both numbers reversed declines seen in the first six months of the fiscal year (April-September), when small cars fell 34% and compact SUVs fell 6% yo-y.

The overall passenger vehicles (cars + SUVs) market, too, grew 17% to 754,574 units in October-November.

Notably, on 3 September, Union finance minister Nirmala Sitharaman announced a slew of cuts in goods and services tax (GST) across multiple products. The cuts on cars saw GST shrink from 28% to 18% for cars of length less than 4 metre, covering both compact SUVs as well as small or mini cars.