Maruti Suzuki Chairman: 88% of Indian households can’t afford a car

Maruti Suzuki Chairman RC Bhargava has said that 88% of Indian households are currently unable to afford a car. Speaking in light of the company’s recent weak fourth-quarter earnings for the fiscal year 2025, which saw profits decline, Bhargava highlighted significant challenges facing the domestic passenger vehicle market.

He pointed to a sustained weakness in domestic car demand, noting that it has been falling for several years. A major factor driving this trend is the limited purchasing power of the vast majority of the population. He explained that out of 300 million households in India, a significant 200 million have an annual income below ₹5 lakhs, making car ownership a distant dream for many.

The situation has been particularly tough for the entry-level car market, traditionally a stronghold for Maruti Suzuki. Rising costs have hit this segment hard.

“The people in the lower-income households and they comprise the bulk of Indians were suddenly faced with sharply rising prices of small cars largely led by regulatory requirements and partly because of commodity prices,” Bhargava stated, adding, “Overall the prices have gone up sharply so they have dropped out of the market.”

Looking ahead, the growth outlook for domestic car sales appears bleak. Citing projections from the Society of Indian Automobile Manufacturers (SIAM), Bhargava mentioned that growth expectations for the 2025-2026 fiscal year are muted at just 1-2%, a slowdown from the approximately 3% growth seen last year. “So, the domestic demand is not growing beyond what it has been in the past, maybe falling a little bit,” he remarked.

However, there is a potential bright spot amid the domestic gloom: exports. RC Bhargava expressed optimism about the company’s performance in international markets, describing it as a “silver lining.”

Maruti Suzuki saw its exports grow by 17% last year, and the company anticipates this could accelerate to around 20% in the current fiscal year. This strong export growth offers hope that it may help offset the sluggishness anticipated in the Indian market, potentially compensating for weakening domestic demand.

These comments come as Maruti Suzuki reported a challenging end to the fiscal year 2025, with its Q4 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) falling by 9% and net profit decreasing by 4.3% compared to the same period last year.