India’s automotive sector has hit top gear, driven by a perfect storm of the prolonged festive season and strategic Goods and Services Tax (GST) reductions. Major car manufacturers are celebrating record-breaking bookings during this period, indicating a strong surge in consumer confidence and purchasing power.
Maruti Suzuki India Limited, a dominant player, reported its highest-ever festive season bookings, tallying an impressive 400,000 orders in just four weeks. Notably, entry-level vehicles saw a remarkable 70% increase in demand.
Partho Banerjee, Senior Executive Officer for Marketing and Sales at Maruti Suzuki, highlighted the transformative impact, stating, “GST 2.0 has truly kickstarted growth, drawing a new segment of customers into the market, specifically two-wheeler owners upgrading to four-wheelers.”
JSW MG Motor India also experienced an overwhelming response, with bookings and deliveries skyrocketing by nearly 90% on the first day of Navratri compared to the previous two years.
Vinay Raina, Chief Commercial Officer at JSW MG Motor India, emphasized the role of tax reforms: “The GST reduction to 18% for smaller petrol and diesel cars, and 40% for larger vehicles, has made car ownership more accessible across India. Coupled with a consistent 5% GST on EVs, which underscores a clear governmental push for sustainable mobility, these factors have significantly boosted our sales.” Mr. Raina added that the company achieved a 34% year-on-year growth in September 2025 over September 2024, marking its highest wholesale figures for the calendar year.
The GST reduction has translated into tangible savings for consumers, with price benefits ranging from ₹54,000 to ₹3.04 lakh, depending on the car model.
While southern and western India historically led in electric vehicle adoption, Mr. Raina noted a promising trend: “We’re now observing strong traction from Tier 2 and Tier 3 cities, reflecting growing confidence in electric mobility beyond the major metros.” Looking to the future, he suggested a tiered GST structure — 0% for EVs, 5% for plug-in hybrids and flex-fuel models, and higher rates for conventional internal combustion engine (ICE) vehicles — to further steer India’s mobility landscape towards sustainability.
Kunal Behl, Vice-President of Marketing and Sales at Honda Cars India Ltd., echoed this sentiment, stating, “The recent GST reforms have made car prices more affordable for a broader customer base. This has enhanced our value proposition and fueled robust festive season demand, with significant growth seen in both Tier 1 and Tier 2 cities.”
Luxury Cars Join the Rally
The luxury car segment also enjoyed the festive momentum. Rajan Amba, Managing Director of JLR India, commented, “The GST cut has notably boosted demand for our luxury SUVs. We’ve seen a surge in bookings leading up to the festive season, and growth is extending beyond metros into Tier 2 and Tier 3 towns. We await the post-festive demand trends to fully assess the long-term impact of the GST cut on the luxury auto industry.”
Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, reported that their vehicles experienced price drops between 5% and 8% — from ₹2 lakh for an A-Class sedan to ₹10 lakh for an S-Class — since GST 2.0. “GST 2.0 has surpassed our expectations, leading to our highest-ever monthly sales in September 2025 and marking the best festive season in Mercedes-Benz’s 30-year history in India,” he said.
Demand for Mercedes-Benz cars was strong across key metros like Delhi, Mumbai, Ahmedabad, and southern cities such as Bengaluru, Hyderabad, Chennai, and Kochi. Moreover, mini-metros also contributed to record sales, buoyed by their ‘Dream Days’ campaign, which made purchasing a Mercedes-Benz particularly appealing during the festive period.
Boom in the Used Car Market
Indirectly, the used car market also reaped benefits from these developments. Hanish Yadav, Senior Vice-President & Business Head at Spinny, observed, “While used cars haven’t directly benefited from GST cuts, the reduction in new car prices is clearly influencing our pricing. As new car buyers upgrade more frequently, we’re seeing an increase in trade-ins and better quality inventory in the used segment. Simultaneously, buyers are expecting greater value for their money, which is reshaping how used cars are appraised.”
Mr. Yadav noted that cities like Bengaluru and Hyderabad are experiencing the strongest growth in used car sales. Additionally, vehicles manufactured in 2021 and later are seeing a significant boost in numbers, attributed to attractive pricing after recent corrections. The luxury used car segment is also witnessing a noticeable surge.