Maruti Suzuki India remains bullish on small car demand following a strong festive season and the recent GST rate cut, even as it prepares to roll out eight new sport utility vehicles (SUVs) over the next five to six years to strengthen its product portfolio.

The company said that the GST rate rationalisation has provided a major boost to mass-segment models. Under the revised structure, petrol, LPG and CNG vehicles with engines below 1,200cc and a length under 4,000mm, as well as diesel vehicles up to 1,500cc and 4,000mm in length, now attract 18 per cent GST — down from the earlier 28 per cent plus cess.

Maruti Suzuki India chairman R.C. Bhargava said the tax cut significantly boosted retail momentum in entry-level models in October. “Our retail sales growth in the 18 per cent GST category was 30 per cent. Big cars have also grown by around 4-5 per cent. Overall, we have seen a 20 per cent growth in retail sales,” Bhargava said.

He dismissed the notion that Indian consumers have moved away from small cars, calling it a “misconception”.

“The perception that no one wants to buy small cars anymore and that aspirations have shifted entirely to premium models has been proven incorrect,” he said.

The auto maker is also close to finalising its plan for a fifth manufacturing facility, with an announcement expected in the coming months. Last year, Maruti Suzuki unveiled plans for a new ₹35,000-crore plant in Gujarat, aimed at expanding capacity to meet long-term demand growth.

Margins under pressure

For Q2FY26, Maruti Suzuki reported an 8 per cent year-on-year rise in consolidated net profit at ₹3,349 crore compared with ₹3,102.5 crore in the same quarter last year. Consolidated revenue from operations grew to ₹42,344.2 crore from ₹37,449.2 crore a year ago.

Operating margins, however, came under pressure due to adverse foreign exchange movements, selective price adjustments, higher promotional spending and lower non-operating income.

Domestic sales volumes during the quarter fell 5.1 per cent year-on-year, but robust export growth of 42.2 per cent helped offset the decline, leading to an overall sales increase of 1.7 per cent.

Company executives told analysts that the festive season saw deferred purchases translating into strong retail momentum in October.