First-time buyers are returning to India’s car market as GST cuts make entry-level vehicles more affordable. Maruti Suzuki says their share of sales has climbed to 54%.
Highlights
- First-time buyers now account for 54% of Maruti Suzuki’s sales, up from 42% a year earlier.
- Their share has risen by nearly 10 percentage points since the start of FY27.
- Maruti Suzuki’s overall sales grew 20% YoY in the first five months of FY27.
- SUV sales increased 5%, while the overall passenger vehicle industry grew around 2.8%.
India’s passenger vehicle market is witnessing a revival in demand from first-time car buyers, with entry-level models gaining momentum following cuts in the Goods and Services Tax (GST) and improved affordability.
According to the report, first-time buyers now account for 54% of Maruti Suzuki’s total sales, compared with 42% a year earlier. Their share has increased by around 10 percentage points since the beginning of the current financial year.
Maruti Suzuki said first-time buyers accounted for 54% of its sales during April-August, up from 42% in the same period last year. The increase indicates a shift in the market after demand for entry-level passenger vehicles had remained under pressure.
The company’s overall sales grew 20% year-on-year during the first five months of FY27, significantly outperforming the broader passenger vehicle industry, which expanded by around 2.8% during the period.
SUVs continued to maintain their dominance in the market, with sales rising around 5%. However, the return of first-time customers is providing fresh momentum to smaller and more affordable vehicles.
The government’s GST rationalisation has played an important role in improving affordability. According to the report, the tax rate on small cars was reduced to 18% from 28%, helping bring down prices and encourage demand among buyers entering the car market for the first time.
Sales of vehicles attracting the 18% GST rate increased 29% to 1.24 million units during April-August, highlighting the stronger demand for vehicles in the lower tax bracket.
Automakers including Maruti Suzuki, Tata Motors and Mahindra & Mahindra have benefited from the changing demand environment. Entry-level models such as the Maruti Suzuki Alto and WagonR and Tata Punch are among the vehicles competing for buyers in this segment.
The trend could provide further support to India’s passenger vehicle market if improved affordability continues to encourage first-time customers to purchase cars.
