Hatchbacks regain popularity in India as GST cuts boost sales
What's the story
Hatchbacks have witnessed a resurgence in India's automotive market, with their share of total passenger vehicle sales rising to 24.4% in Q4 2025. The increase is a jump from the 23.5% recorded during the first nine months of the year. Popular models like Maruti Suzuki Alto, Tata Altroz, and Hyundai i20 saw their sales volumes rise by nearly 20% sequentially during this period, as per data from automotive consultancy firm Jato Dynamics.
Market impact
GST cuts and price reductions fuel hatchback sales
The increase in hatchback sales has been largely attributed to the Goods and Services Tax (GST) cut in September and subsequent price reductions by automakers. The GST on most small cars was slashed from 28% to 18% on September 22. Partho Banerjee, Senior Executive Officer at Maruti Suzuki, noted a significant growth in entry-level sales numbers after the tax cut.
Sales boost
Maruti Suzuki sees a surge
Post-GST cut, Maruti Suzuki has witnessed a 5% increase in first-time buyers opting for hatchbacks. The company's mini cars: Alto, S-Presso, Celerio, and WagonR witnessed a whopping 91.8% rise in sales in December alone. The company's production team is now adjusting schedules according to market demand to meet this sudden spike in demand for small cars.
Future forecast
Tata Motors anticipates steady growth
Tata Motors also expects a steady growth in hatchback volumes in the second half of fiscal 2026, thanks to GST-related price benefits. However, the company predicts that the segment share will remain flat, mirroring calendar year data.