Hyundai Eyes Explosive Growth in Small SUV Market Post-GST Cut

The automotive landscape in India is buzzing with anticipation, and at the heart of this excitement is Hyundai Motor India Ltd (HMIL). The auto giant is placing a significant bet on the small SUV segment, predicting an unprecedented surge in growth, provided a crucial policy change comes into play: a reduction in Goods and Services Tax (GST) rates.

Currently, SUVs, particularly those exceeding certain specifications, bear a hefty tax burden.

They are subjected to a 28% GST, compounded by a cess ranging from 17% to 22%, which pushes the total tax incidence to a substantial 45-50%. This high taxation has been a point of contention for the industry, with manufacturers consistently advocating for a more rationalized tax structure to stimulate demand and make vehicles more affordable for the end-consumer.

Hyundai's optimism is not unfounded.

The small SUV segment, characterized by vehicles under four meters in length, has already been witnessing a remarkable uptick in popularity. These compact yet capable vehicles strike a perfect balance between city maneuverability and robust road presence, making them incredibly appealing to a diverse range of Indian buyers.

Models like Hyundai's own Venue and the recently launched Exter, alongside the ever-popular Creta, exemplify this trend, driving significant sales volumes for the company.

A GST rate cut, as envisioned by Hyundai and other industry players, could be the catalyst needed to unlock the full potential of this segment.

Lower taxes would directly translate to more competitive pricing, making these aspirational vehicles more accessible to a broader demographic. This accessibility, in turn, is expected to fuel a sharp increase in sales, positioning small SUVs as the fastest-growing category within the overall automotive market.

Tarun Garg, COO of HMIL, has been a vocal proponent of this view, emphasizing that while the entire SUV market stands to benefit from a tax rationalization, the smaller end of the spectrum is poised for the most explosive expansion.

This sentiment echoes throughout the industry, with rivals like Maruti Suzuki also acknowledging the immense growth potential within the SUV space, especially if policy support materializes.

The stakes are high. For car manufacturers, a GST reduction means higher sales volumes and better capacity utilization.

For consumers, it means more affordable, feature-rich vehicles. And for the Indian economy, it could signify a much-needed boost to manufacturing and ancillary industries. As the automotive world keenly watches the developments on the policy front, Hyundai's bold forecast for the small SUV segment stands as a beacon of the industry's hopes for a brighter, more affordable future on Indian roads.