ET Graphics | Compact cars gain momentum

Synopsis

Mini car sales saw a significant increase last quarter, doubling after a three-year slump. This surge followed recent Goods and Services Tax rate reductions, making these vehicles more affordable. Entry hatchbacks, under 3.6 meters, experienced a 107% rise in sales year-on-year. Previously, sales had dropped by 62% from their peak due to rising costs. The market now shows renewed demand for these economical vehicles.

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Sales of mini cars like Alto and S-Presso in the local market doubled last quarter after a gap of over three years supported by recent GST rate cuts, which lowered the tax burden on small cars and made them significantly more affordable again.

As per industry estimates, 43,757 entry hatchbacks (less than 3.6 metre in length) were sold last quarter, which is an increase of 107% over the year-ago period.

Sales of mini cars stood at 55,133 units in Q1 FY23, then fell steadily to close at 21,106 units in Q1 FY26—a steep 62% drop from the earlier high, as rising costs and shrinking demand pushed buyers away from entry-level cars.

Q1 MINI CAR SALES (in units)