GaadiWaadi –
Following a flat first half, Indian car market sees strong growth in the second half of FY2026, largely owing to the major GST reductions in September 2025
Car sales in India were initially projected to grow at a single-digit rate in FY2026, but as the financial year draws to a close, the outlook appears far stronger. In the second half of the financial year, industry analysts suggest that car sales could grow by more than 15% year-on-year.
The major reductions in GST introduced in September, especially on sub-4 metre models with engines not bigger than 1,200 cc (petrol)/1,500 cc (diesel), appear to have helped the Indian auto market achieve substantial growth in the recent months. Industry data released by the Society of Indian Automobile Manufacturers (SIAM) has revealed that car sales between October 2025 and February 2026 grew from 18 lakh units to 21 lakh units year-on-year.
Compared to the October 2024-February 2025 period, car sales were up 14.71% in the same months this fiscal. In fact, FY2026 had the best-ever October, with 4,60,739 cars sold, 17.17% more than in FY2025 (3,93,238 units).
Less than two weeks remain in FY2026, and the growth seen between October 2025 and February 2026 is expected to continue through the month. According to industry analyst forecasts, March 2026 could see sales of around 4.4-4.5 lakh cars. Considering the fact that sales in March 2025 stood at 381,358 units, this could mark a year-on-year growth of around 15.38-18.00%.
If the projections are accurate, total car sales in FY2026 could be around 46.5-47.0 lakh units. That would mark an 8% year-on-year growth from 43 lakh cars registered in FY2025. The GST cuts have provided a major boost to hatchbacks, which were once the key growth drivers of the industry but have been overshadowed by the booming demand for SUVs in recent years.
Cars such as Maruti Suzuki’s Alto, S-Presso, and Swift, as well as Hyundai’s Grand i10, are back in focus. These models recorded a strong growth in the second half of FY2026. Sales of the Alto, for instance, grew more than 48% between the first half of FY2026 and the October 2025-February 2026 period. As for SUVs in the sub-4 metre category, Tata Motors’ Nexon is expected to be the best-selling model and register a growth of nearly 34%.
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