Maruti Suzuki Cuts Entry-Level Car Prices Beyond GST Reduction to Boost Demand

Maruti Suzuki India Ltd. has slashed prices of its entry-level models by more than the 10% goods and services tax cut effective September 22, aiming to revive sales hit by affordability concerns and a shift toward larger utility vehicles.

“We have now priced the entry-level cars in a way that affordability is no longer a challenge. We are hopeful this will kickstart the motorisation of the Indian auto industry,” said Partho Banerjee, executive director at Maruti Suzuki, in a press briefing Thursday.

The GST rate on small cars will drop to 18% from the current 28% plus cess, implying a net reduction of 8.5%. Maruti Suzuki is offering deeper cuts, with discounts on the S-Presso ranging from 12.6% to 17.5% and on the Alto from 11% to 20%. The offers run until December 31, after which the company will review. Channel partners will be compensated for the discounts.

Banerjee said the company expects pent-up demand to flow into October as buyers deferred purchases in August, but cautioned against reading too much into near-term sales spikes. He added that GST rationalisation, income tax breaks from the Union Budget, and repo rate cuts by the Reserve Bank of India’s policy panel could spur a long-term “motorisation revolution” in India, similar to Japan’s experience.

Maruti Suzuki expects passenger vehicle sales in India to revert to a 6–7% growth trajectory from next financial year.