First-time car buyers are making a comeback in India
What's the story
The Indian car market is witnessing a revival of first-time buyers, with their share of sales rising by an estimated 10% in the first half of this fiscal year. This is the biggest jump since the pandemic. The trend has been attributed to lower taxes reviving demand for entry-level passenger vehicles. Maruti Suzuki has reported that first-time buyers accounted for 54% of its sales between April and August, up from 42% last year.
Market response
Tata Motors and Mahindra also report rise in 1st-time buyers
Other major players in the Indian car market, such as Tata Motors and Mahindra & Mahindra, have also witnessed a rise in first-time buyers.
Tata Motors has seen an increase of 6-7% in this segment over the past year.
Meanwhile, Mahindra & Mahindra's entry-level SUVs saw a 20% year-on-year growth during the first five months of this fiscal year.
Tax impact
Government's GST reduction on smaller vehicles
The government's decision to cut the goods and services tax (GST) on smaller vehicles less than four meters in length from 28% to 18% last year has had a major impact.
Rahul Bharti, Maruti Suzuki's Senior Executive Officer, said, "GST 2.0 has enabled the return of first-time car buyers, broadening the base of the market."
He added that this gives fresh momentum to India's journey toward mass motorisation.
Sales surge
Mini cars like Alto and S-Presso see boost
The reduction in GST has also boosted sales of Maruti's mini cars, Alto and S-Presso. Their sales rose 96% to 67,334 units between April and August.
Overall, vehicles attracting an 18% GST saw a 29% rise in sales during the same period.
This category includes models like Maruti Suzuki's Alto and WagonR, Tata Punch, and Mahindra Bolero among others.