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Car demand surges after GST 2.0, Maruti Suzuki plans higher capex

Maruti Suzuki India is stepping up its capital expenditure plans as passenger vehicle demand gains momentum following the GST 2.0 tax rationalisation, the countrys largest carmaker said . Maruti Suzuki MD and CEO Hisashi Takeuchi said the company recorded strong growth in passenger vehicle sales during the April-August 2026 period, with overall volumes rising around 36% year-on-year. The entry-level segment saw an even sharper increase, with sales climbing more than 96% during the period. Takeuchi attributed the improvement partly to increased affordability following the GST changes. He said the stronger demand highlighted the role of consumer spending in driving economic growth and expanding access to personal mobility. According to Takeuchi, the increase in demand is also encouraging the company to bring forward its investment plans. Higher capacity and investment, he said, could create a wider multiplier effect by supporting domestic manufacturing, employment and exports. The impact of the tax changes has also been visible beyond passenger cars. Mahindra & Mahindra Executive Director and CEO, Auto and Farm Sector, Rajesh Jejurikar said GST rationalisation had created additional momentum for the economy and supported demand across several automobile categories. He also pointed to the role of the tax reduction in absorbing some of the pressure from fluctuations in raw-material costs. According to him, part of the GST benefit helped prevent higher input costs from translating into additional inflationary pressure. Mahindra is also expanding its electric vehicle capacity, with the company planning to add 4,000 units of capacity by March 2027 as it prepares for expected growth in the EV segment. The GST Council approved the revised automobile tax structure in September 2025, with the new rates taking effect from September 22, 2025. Under the revised structure, certain smaller vehicles were shifted from the earlier 28% GST rate to 18%. This included petrol, LPG and CNG vehicles with engines up to 1,200 cc and a length of up to 4,000 mm. Diesel vehicles meeting the same length criterion and having engines up to 1,500 cc were also moved to the lower tax slab. The Federation of Automobile Dealers Associations (FADA) has also highlighted the rise in vehicle retail sales since GST 2.0 came into effect. FADA President Sai Giridhar said auto retail registrations crossed 3 crore vehicles during the 11-month period from October 2025 to August 2026, representing nearly 20% year-on-year growth. He contrasted this with growth of less than 5% during the comparable period before the tax reform.

23 Sep 2026 8:06 pm