How GST 2.0, festival season demand led to record car sales in October, Pg13.

Key Highlights:

• Indian carmakers recorded sales of over 4,70,000 units in October 2025, a 17% increase compared to October 2024.
• The surge was driven by the revised Goods and Services Tax (GST) and festive season demand, particularly boosting the small car segment.
• Maruti Suzuki sold 1,76,318 passenger vehicles, while Mahindra & Mahindra achieved record SUV sales with 71,624 units.
• Tata Motors reported sales of 61,134 units, marking a 27% year-on-year growth, while Hyundai experienced a 3% decline with 53,792 units sold.

Detailed Insights:

• The GST 2.0 revision reduced the tax slab for small cars (engine capacity not exceeding 1200 cc for petrol and 1500 cc for diesel, and length not over 4 meters) to 18%, down from 28% plus cess, stimulating demand.
• Bigger cars are now taxed at 40%, with an additional compensation cess of 17-22%, bringing the total tax to as high as 50% in some instances; all automotive parts are taxed at 18%.
• The small car segment, which had been declining, witnessed a revival due to the GST rate reduction, according to Maruti Suzuki India’s chairman RC Bhargava.
• Sales of entry-level cars priced below Rs 5 lakh, a key indicator of demand from first-time buyers, had fallen from 9,34,538 units in FY16 to just 25,402 units in FY25.
• Kia reported a 30% rise in sales at 29,556 units in October, marking its best-ever monthly sales since entering the Indian market.

Key Concepts Involved:

• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services.
• Cess: A tax levied for a specific purpose in addition to the existing tax.
• Fiscal Year (FY): A 12-month period used for accounting purposes, not necessarily aligned with the calendar year.