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Hatchbacks Roar Back: India Car Sales See Q4 Revival
12 Jan
Summary
- Hatchback sales volume increased about 20% in the last quarter of 2025.
- GST cut to 18% on small cars from 28% boosted entry-level upgrades.
- Maruti Suzuki saw 5% more first-time buyers opting for hatchbacks post-GST.
The share of hatchbacks in India's car sales has seen a notable increase in the last quarter of 2025, marking a potential turnaround after a period of decline that began during the Covid-19 pandemic. Sales volumes for hatchbacks experienced a sequential rise of about 20% during this period, helping the segment achieve flat volumes for the calendar year 2025 compared to the previous year.
Industry experts attribute this recovery largely to the Goods and Services Tax (GST) reduction implemented on September 22, 2025. The GST on most small cars was slashed to 18% from 28%, leading to price reductions by automakers. This affordability boost has reportedly encouraged many two-wheeler users to upgrade to entry-level cars, arresting the market share slide for hatchbacks.
Maruti Suzuki, a market leader, has observed a 5% increase in first-time buyers opting for hatchbacks post-GST cut. The company's mini car sales, including models like Alto and WagonR, surged by 91.8% in December 2025, with waiting periods extending up to a month and a half. While Tata Motors also anticipates modest growth for its hatchback portfolio in the latter half of fiscal year 2026, the coming months will be crucial in determining if this trend represents a sustained shift in consumer preference.
