Small Cars Roar Back: 92% Sales Surge Under ₹5 Lakh, Thanks to GST Cuts

• India's automobile sector sees a resurgence in small car demand, with sales of vehicles under ₹5 lakh increasing by 92% between December 2025 and early January 2026.
• This shift marks a return from the previous preference for SUVs, indicating a renewed focus on economy and mileage among Indian buyers.
• The significant sales boost is attributed to government-implemented GST cuts on budget-segment cars under 'GST 2.0' last September, making them more affordable.
• Demand for budget cars has surged by over 35% in small towns and rural areas, driven by improved infrastructure and agricultural income.
• Despite rising petrol prices, small cars remain popular due to their good mileage and low servicing costs, proving affordability is key in the Indian auto market.

Why It Matters: Affordable small cars are making a strong comeback in India, driven by GST cuts and middle-class demand.