Small car prices will come down by 9%, says Maruti Suzuki India chairman

According to Maruti Suzuki India chairman R.C. Bhargava, the GST reduction on small cars is a "turning point" for the auto industry. He explains that the price drop of popular models like Alto and Wagon R will address affordability issues.

Written by Rishi Raj

September 4, 2025 19:28 IST

Maruti Suzuki, RC Bhargava, GST cut, small cars, car prices, auto industry, affordability, first-time buyers, Alto price, Wagon R price, demand revival, GST on cars

In practical terms, an Alto buyer will save about Rs 45,000, while the price of a Wagon R will drop by Rs 60,000-70,000. (Reuters)

Maruti Suzuki India chairman RC Bhargava believes that the reduction in GST on small cars will prove to be a turning point for the industry. Speaking with Rishi Raj, he explains why affordability is key to driving demand, how first-time buyers are expected to return, and what the price cuts mean for popular models like Alto and Wagon R. Excerpts:

What kind of impact will the GST cut have on small car prices?

A. Prices of small cars such as Alto and Wagon R will fall by around 8.5-9%. This is because the GST rate on them has been reduced from 28% (29-31% including cess) to 18%. In practical terms, an Alto buyer will save about Rs 45,000, while the price of a Wagon R will drop by Rs 60,000-70,000. This is a substantial relief for buyers. Combined with lower income tax and moderating inflation, it means more money in the hands of consumers.

Do you expect this to trigger a revival in demand?

A. Certainly. I expect an upsurge in consumer buying, not just for cars but across sectors. The small car segment in particular had stagnated because of affordability issues. With this tax relief, growth will return. It is a matter of happiness that the government has recognised that there are a large number of consumers at the lower end and they need some help.

Will bigger cars also benefit from the GST changes?

A. Prices of larger vehicles — above 1200 cc petrol and 1500 cc diesel with length of over 4 metres — will also come down slightly, since they will now attract 40% GST compared to 43-50% currently including cess. But the reduction there may only be about Rs 10,000-12,000, which does not significantly influence buying decisions in that segment. Perhaps consumers may opt for top-end variants in these categories.

How do you see this affecting first-time buyers?

A. The share of first-time buyers has already fallen to around 40%, mainly due to rising costs from stricter emission norms, regulatory expenses and tax structures. Car penetration in India is still just 34 vehicles per 1,000 people, which is very low. With the price drop, I expect two-wheeler owners to start upgrading to small cars again.