Maruti Suzuki pitches for govt support to rescue small car segment

India’s largest carmaker, Maruti Suzuki India, on Monday called for incentives to spur small car sales in the country, as the segment continues to witness a gradual decline, with the affordability factor coming into play.

The small car segment, which had once dominated the Indian total passenger vehicles market, accounts for less than 30% at present.

Entry cars priced below ₹

5 lakh, which used to be around a million units (9,34,538 units) in FY16, have declined to just 25,402 units in FY25.
Maruti Suzuki saw sales of models like Alto and S-Presso decline to 6,776 units in May as against 9,902 units in the same month last year. Even the sales of compact cars, including Baleno, Celerio, Dzire, Ignis, Swift, and WagonR, fell to 61,502 units as compared to 68,206 units in May 2024.

Maruti Suzuki India Senior Executive Officer (Marketing & Sales) Partho Banerjee told reporters in a virtual press conference that with enhanced regulation, prices of small car models have increased significantly, impacting the buyers who want to upgrade from two-wheelers to entry-level cars.

“So somewhere the government has to understand that if they want to fuel the growth of the auto industry, they need to understand where the problem is and how to increase the size of the pie (small car sales),” he noted.

“Some incentives are required so that the customer who is not able to afford the car can come in and can migrate to a four-wheeler from a two-wheeler.” The share of small cars in the overall PV market in India was 47.4% in FY18 and 46% in FY19. In FY20, it improved marginally to 46.5% and has been on a decline since.

In FY21, it was 45.6%, 37.5% in FY22, 34.4% in FY23 and 27.7% in FY24.

The auto major also stated that there was no immediate impact from China’s export curbs on rare earth magnets on its production.

MSI Senior Executive Officer (Corporate Affairs) Rahul Bharti said China has asked for an end-user certificate, endorsed by the government and approved by the Chinese government.

“So that process is on and industry is in discussion with the government,” he stated.

China controls over 90% of global processing capacity for the magnets, used across multiple sectors including automobiles, home appliances and clean energy.

Replying to a separate query, he noted that the automaker is aiming to sell 4 lakh units in export markets this fiscal.

“Our target for this year (FY26) is at least four lakh units, which implies a growth of at least 20% over FY25,” Bharti said.

He noted that the company’s exports are fairly diversified, with a presence in about 100 countries.

“Africa, Latin America and Southeast Asia are our big markets. We have entered Japan recently, and it has quickly sprung up to the second-top most destination on the back of just two models, the Fronx and the Jimny,” Bharti said.

And the interesting part is that the EV is yet to come, and that will shore up the numbers further, he stated.

“We do think that our market share in exports will grow this year. We are already at 43% and the golden mark of 50% is close,” Bharti stated.

Last fiscal, Maruti Suzuki reported record exports of 3,32,585 units, a growth of 17.5% over FY24. The auto major had exported 2,83,067 units in the 2023-24 fiscal.

The company accounted for nearly 43% of the country’s total vehicle exports last fiscal. Fronx, Jimny, Baleno, Swift and Dzire were the highest exported models in FY2024-25 while South Africa, Saudi Arabia, Chile, Japan and Mexico were the top five markets.