GST Rate Cut Fuels Maruti Suzuki's Demand Revival; Exports Surge 42%

Following a recent Goods and Services Tax (GST) rate cut, Maruti Suzuki India Limited has observed a robust revival in domestic demand. Customers had delayed purchases anticipating the rate reduction, which caused a temporary 5.1% year-on-year decline in domestic volumes in Q2 FY26. However, post-September 22, retail sales have sharply increased, with the company achieving its highest-ever Navratri sales in a decade, delivering 1.65 lakh vehicles in the first eight days of the festival. Small cars have regained significant traction, contributing nearly 250,000 units out of 400,000 retail sales since September 22.

Exports have continued to be a strong growth driver, surging by 42.2% year-on-year in Q2 FY26. Maruti Suzuki accounted for nearly 45.4% of India's total passenger vehicle exports during the quarter, with models like the Fronx and E-Vitara performing well globally. The company now expects to surpass its FY26 export target of 400,000 units.

Maruti Suzuki aims to achieve a 50% market share by FY30-31 by launching eight new models across segments. The company remains confident, with a richer product mix and renewed demand across categories contributing to this goal.

Impact This news is highly positive for the Indian auto sector and Maruti Suzuki. The GST cut stimulates consumer spending on vehicles, boosting sales for manufacturers. The strong export performance enhances foreign exchange earnings and global competitiveness. Maruti Suzuki's planned model launches and market share targets indicate aggressive growth strategies. The stock is likely to see increased investor interest, and the broader market may benefit from a revival in consumer durables demand. The focus on small cars also signals a broader economic recovery reaching entry-level buyers. Impact Rating: 8/10

Difficult Terms: GST: Goods and Services Tax, a unified indirect tax system levied on the supply of goods and services. YoY (Year-on-Year): A comparison of a metric from one year to the same period in the previous year. EBITDA margin: Earnings Before Interest, Taxes, Depreciation, and Amortization margin, a measure of a company's operating profitability. Basis points: A unit of measure equal to one-hundredth of a percent (0.01%). 134 basis points is equal to 1.34%. Realisation: The average selling price or revenue generated per unit of a product sold. Product Mix: The combination of different products a company sells, affecting overall revenue and profitability. Retail Sales: Sales made to end consumers, as opposed to wholesale sales to distributors or dealers. First-time buyers: Individuals purchasing a vehicle for the very first time. FY (Financial Year): A 12-month period used for accounting purposes, typically from April 1 to March 31 in India. H2FY26: The second half of the Financial Year 2025-2026. FY30-31: The Financial Year 2030-2031. Passenger vehicle: Vehicles designed for carrying passengers, such as cars and SUVs, excluding commercial vehicles like trucks and buses.