A noticeable resurgence in small car sales, attributed to recent GST rate reductions, is a key factor prompting Maruti Suzuki to finalize plans for its fifth manufacturing plant. Chairman R. C. Bhargava announced that a decision on the new facility, which represents a substantial Rs 35,000 crore investment and is expected to be located in Gujarat, is imminent and likely to be announced in the coming months. This development signals a potential recalibration of market perceptions, as small car demand proves resilient against the trend towards larger vehicles.
At a recent earnings conference, Bhargava acknowledged that the company’s long-term financial projections, which targeted a turnover of Rs 1.68 lakh crore by 2030-31 and annual production of 40 lakh units, will be revised. The positive influence of GST on sales volumes means these targets may need adjustment. He clarified that the impact of the GST reduction is not yet substantially reflected in the Q2 financial results, but he anticipates a significantly stronger performance in the second half of the current fiscal year.
Supporting the optimistic outlook, the entry-level small car segment, comprising models like the Alto K10, S-presso, Wagon R, and Celerio, has experienced a healthy boost. The share of these models in Maruti Suzuki’s total retail sales has grown to 20.5% following the GST rate cut, up from 16.7% previously. This renewed consumer interest in affordable vehicles is strengthening Maruti Suzuki’s growth trajectory and paving the way for the crucial decision on its fifth manufacturing plant.