Indian Car Makers Plan Major Manufacturing Expansion After Record GST-Driven Sales

Key Indian automotive manufacturers are substantially increasing their production capabilities by 20-40 per cent over the coming months, buoyed by confidence that the strong demand recovery following goods and services tax (GST) reductions will persist into next year, says a report by ET Prime.

Maruti Suzuki Sets Ambitious Production Target

Top automobile manufacturer, Maruti Suzuki, has set its sights on producing over 200,000 vehicles this November, according to sources familiar with the company's strategy. This represents a significant increase from the average monthly output of 172,000 units recorded through September. The production target would mark a November record for the automaker, a month typically characterised by reduced dispatches as the festive season winds down.

Hyundai, Tata Motors Expand Manufacturing

Tata Motors has instructed its supply chain partners to prepare for monthly production volumes of 65,000-70,000 vehicles, a substantial jump from the 47,000 units averaged monthly during the first half of the financial year. Meanwhile, Hyundai Motor India has started dual-shift operations at its second manufacturing facility in Talegaon, Maharashtra, enabling capacity increases of up to 20 per cent.

Retail Performance Drives Expansion

India's passenger vehicle retail market achieved unprecedented heights last month, with sales reaching 557,373 units -- a record figure driven by robust festive season demand and the implementation of GST cuts, which significantly reduced dealer inventory levels.

Maruti Suzuki's retail figures climbed 20 per cent to reach a monthly peak of 242,096 units in October. 

Partho Banerjee, senior executive officer, marketing and sales said the company had 104,000 vehicles in stock to last up to 19 days, and pending orders for 350,000 units at the start of November. 

"Our production teams are working overtime, even on a few Sundays, to maximise supplies and reduce wait time," said Banerjee.

Industry Leaders Voice Optimism for Sustained Growth

Tarun Garg, chief operating officer at Hyundai Motor India, said the GST cuts sharply boosted sales. 

"We (at Hyundai) were constrained by capacity (earlier). But now with the Pune plant coming in, we should see an upside (in production) by 20 per cent," he said, adding the company expects to strengthen its footprint with new products and the incremental capacity going ahead.

Amit Kamat, chief commercial officer, Tata Motors Passenger Vehicles said the festive season "has brought strong momentum to our retail performance, supported by healthy network stock levels and the positive impact of GST benefits." 

The automaker expects to continue the growth momentum in the fiscal second half backed by factors such as a strong order book and new launches.

Positive Forecasts for H2 Performance

Maruti Suzuki anticipates healthy sales expansion during the second half of the fiscal year. The manufacturer recently suggested during a post-earnings briefing that the automotive sector should experience 6 per cent growth in H2FY26, rebounding from approximately 1 per cent contraction in the first half.

S&P Global Mobility, which provides production and sales forecasts on a calendar year basis, has maintained its 2025 growth projections despite sales disruptions between the rate cut announcement on 15 August and implementation on 22 September. The forecasting firm anticipates the current demand surge will compensate for earlier shortfalls and continue into the new year.

Gaurav Vangaal, associate director, light vehicle, India sub-continent, at S&P Global Mobility said prior to the tax cuts, he expected vehicle production to rise 1-2 per cent in 2026. "We now feel this would be much higher at 6-7 per cent," he said.

Overall Market Performance

Domestic production of cars, saloons, and utility vehicles increased by 3.8 per cent to 2.57 million units during the first half of the current financial year. Whilst exports surged 18 per cent to 445,884 units during this period, domestic wholesale figures declined by 1.4 per cent, according to data from the Society of Indian Automobile Manufacturers (SIAM). October wholesale and production data from SIAM remains pending.