50% of car sales in India still happen in under ₹10 lakh segment: Hyundai’s Tarun Garg

Cars costing less than ₹10 lakh have not seen a slowdown in sales over the last four years and the segment still contributes 50% to the total industry sales, according to Hyundai Motor India chief operating officer Tarun Garg.

Car buyers are choosing smaller sport utility vehicles instead of hatches, Garg said, adding that the entry SUV segment with cars such as Tata Motors’ Punch and Hyundai’s Exter never existed a couple of years ago.

The Exter and the Punch contribute almost 5-6% to the overall industry volumes, he said.

On the GST rate cut, Garg said the rate rationalisation will bring car sales growth back to 5% form September 2025 to March 2026 compared with a de-growth of 2% in the first five months of the ongoing fiscal.

11%-13% GST cut on small cars including compensation cess and 3%-10% on large cars comes at the right time, said Garg.

“After 4-5 years of good growth, a dip happens that stays for 12-16 months normally. And then you need something to spur it back. Since July last year, the industry started to feel under pressure. In April to August, the industry de-grew at 1.5 to 2%. There were danger signs of slipping into negative territory. But the GST rate cut will have big impetus as it comes at the festive time,” said Garg.

“From April-August -2%, the industry should be back to the average CAGR growth of 5% from September to March, a swing of 7%,” Garg added.

India’s car penetration is 34 per 1,000 people. With cars becoming more affordable, first-time buyers will come in, said Garg.

For Hyundai first-time buyer percentage has gone up from 31% in 2020 to 40% now, he said.

“In the less than 4 metre segment, SUVs will see the highest growth. That is the segment which represents both affordability and aspiration,” he said.

“Many customers will move to small SUVs, mid-entry SUVs. The Venue and the Exter segment could see very substantial growth. The maximum reduction of 11-13% has happened there. In terms of volume, this is the biggest segment,” said Garg.