Why is India's car market still on fire?

Carmakers in India are witnessing brisk sales. After a record-breaking October, sales have once again hit fresh highs in November.

Maruti Suzuki India Ltd, India’s biggest carmaker, recorded 21% year-over-year growth in passenger vehicle wholesales - dispatches from the factory shop floor to dealerships - in November.

Tata Motors and Mahindra & Mahindra, the second-largest and the third-biggest car manufacturers by volumes, respectively, too, saw 22% y-o-y growth in the domestic passenger vehicle sales last month. Hyundai Motor India Ltd (HMIL) achieved monthly domestic sales of 50,340 units in November 2025, registering a 4.3% year-on-year growth.

South Korean mass-premium carmaker Kia clocked its best-ever November sales since its entry into the Indian market. The company's wholesale grew 24% year-on-year in November 2024. Sales of Japanese automaker Toyota Kirloskar Motor jumped 28% year-on-year to 33,752 units.

This rebound in passenger car sales comes after the industry de-grew 1.4% year-on-year in the first half of the ongoing financial year, according to the Society of Indian Automobile Manufacturers (SIAM).

The rebound in sales is because the small car segment is bouncing back in full strength after many years, thanks to the historic GST reform, says Rahul Bharti, Senior Executive Officer, Corporate Affairs, Maruti Suzuki.

Sales of the Alto and the S-Presso, Maruti Suzuki’s small cars in the mini segment, which SIAM classifies as entry-level hatchbacks up to 3.6 metres in length and one litre engine displacement, rose 26.6% year-over-year to 12,347 units for the month of November.

“We are seeing very good traction. The market is very bullish. We have pending bookings of close to 1.5 lakh units. Our retail sales have grown by almost 31% in November,” says Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki.

“Presently, we have run out of 8 models in our factory. All the vehicles have been dispatched to our dealers. That’s the demand in the market,” Banerjee says. “The car market is very bullish, and our network stock is at 19 days. Almost 80,000 vehicles are in our network stock, and around 40,000 vehicles are in transit, so we have close to 1.2 lakh vehicles in the network as of December 1."

In terms of retail sales, the small car category, which attracts 18% GST, recorded a whopping 39% growth, over twice that of 17% growth seen in cars that fall in the 40% GST slab, says Banerjee.

Car penetration in India is less than 33 cars per 1,000 people. “Today, only 3% of India’s population owns a car…We have to enable people from the 97% club to experience the joy of mobility and come into the car ownership club,” says Maruti Suzuki's Bharti.

Bharti also junked the narrative of Indian buyers preferring SUVs. “Many people were spreading a wrong narrative before the GST reform that small cars were not being purchased because entry customers are directly buying expensive SUVs, and so they didn't need any support. If that were true and if the large cars and SUVs were growing anyway and entry customers were also buying expensive cars, then the industry before GST should be growing like 20%-plus, but it was stagnant at near zero. Obviously, something was not consistent. This narrative has now been proven totally incorrect, thanks to the GST reforms," he says. "Our effort is to rejuvenate the small car segment. We will do everything it takes." 

Tarun Garg, wholetime director and chief operating officer at HMIL, credits the GST 2.0 reforms for the sales momentum. Atul Sood, senior vice president, Sales & Marketing, Kia India, too, says the recent GST relaxation, a supportive policy environment and rapid advancements in mobility infrastructure continue to expand purchasing confidence across segments.