Maruti Suzuki believes that small car segment will recover by next year
In a rapidly evolving automotive market, Maruti Suzuki, India’s largest car manufacturer, has reaffirmed its commitment to producing affordable small cars for budget-conscious buyers. This statement comes at a time when the domestic passenger vehicle industry is witnessing a significant shift towards higher-cost SUVs, with many automakers exiting the small car segment.
Despite the shrinking market share of entry-level vehicles, Maruti Suzuki’s Chairman, RC Bhargava, emphasised the company’s dedication to serving customers who may not have the means to purchase more expensive vehicles.
The entry-level car market, once accounting for a significant portion of the industry, has seen a dramatic decline. From comprising around 33% of the market in 2015, it has shrunk to an estimated less than 1% in the past year. The COVID-19 pandemic disproportionately impacted lower-income consumers and that’s one of the big reasons for this trend. The rising costs of small cars, outpacing income growth, have made them increasingly unaffordable for many potential buyers.
However, Maruti Suzuki remains optimistic about the future of the small car segment. The company anticipates a recovery next year, driven by improvements in affordability. Bhargava underscored the importance of this segment for the overall growth of India’s passenger vehicle market, noting that small cars are often the entry point for first-time car buyers.
In line with this commitment, Maruti Suzuki recently launched a new version of its popular hatchback, the Swift. Managing Director and CEO H. Takeuchi expressed the company’s responsibility as a market leader to rejuvenate the hatchback segment.
While Maruti Suzuki continues to focus on small cars, it is also enhancing its offerings in the lucrative SUV segment. The company aims to regain its 50 percent-plus market share in the industry, acknowledging the growing demand for SUVs, which now account for around 50% of the total market volume.
India’s passenger vehicle market achieved a new high of 4.2 million units in the fiscal year 2023-24, maintaining its position as the third-largest car market globally. However, industry growth has been moderating and is expected to slow to low single digits in the current financial year.
Despite these challenges, Takeuchi remains hopeful about the future. Highlighting the untapped potential in the Indian market, he noted that only 3% of Indians currently own cars.
