Maruti, Tata Motors, Hyundai India: Is the rise in small car demand after GST cuts sustainable? Check what CEAT MD says

Top industry leaders, as well as analysts, hailed the decision and said that it would spur the demand for cars in all categories, including the smaller ones.

However, tyre maker CEAT Ltd MD and CEO Arnab Banerjee recently said that the overall consumer trend still is towards buying SUVs, and it is too early to say if the rise in demand for small cars witnessed by automobile manufacturers in the GST 2.0 era will be sustained.

CEAT guidance

The company is maintaining its guidance for double-digit growth for the ongoing fiscal year, although GST 2.0 has provided an impetus, and it is looking to tap rural markets, especially for farm and two-wheeler tyres, Banerjee told PTI.

"It is too early to say... Overall consumer trend still is towards buying SUVs," Banerjee said when asked about the continuation of the impact of GST 2.0 in the passenger car segment, especially the rise in small car demand.

In the last few years, SUV sales have driven the passenger car segment, and small car sales have declined due to affordability issues.

In 2025, SUVs continued strong traction, going up to 55.8% of total PVs sold in India from 53.8% in 2024, even as small cars showed signs of recovery in the GST 2.0 era.

Passenger vehicle wholesales in India stood at 44,89,717 units in 2025, up 5% from 42,74,793 units in 2024, as per SIAM data.

"We have to wait for another quarter to see if the structural change that the OEMs are witnessing will be reversed, (if so) then numbers will be higher for smaller-sized tyres again," Banerjee noted.

When asked about the outlook for the fiscal post GST rate cuts, Banerjee said, "We have been giving a guideline that we will grow by double digits right... the growth momentum will be sustained."

He further said, "In the replacement market, with our reach in rural markets, we should be able to tap into the demand for farms and two-wheelers that will be sustained. In the next quarter, we will enter March, which is the summer season, and March to June is usually a high season for us."

Moreover, he said the commercial vehicle tyre segment is doing well.

On international business, Banerjee said while "the US market is always touch and go", the company has had "good traction in some of the other markets", including Europe and Southeast Asia.

In the US, the company's network is developing well, he said, adding, "As soon as things stabilise in the US, that growth can be tapped into as well."

Which companies make small cars in India?

Major car companies in India that produce small cars (hatchbacks, compact cars, city cars or subcompact vehicles) are as follows.