Entry-Level Car Sales Crash 97% Since FY2016, Maruti Suzuki Hit Hardest

Small-segment cars or hatchbacks have been the backbone of the Indian automobile market for decades. In the last few years, the small car segment has faced immense pressure because of rising demand and sales for utility vehicles, including SUVs and crossovers. This notable shift has drastically impacted the leading automobile brands that have extended the range of hatchbacks in their portfolio, especially Maruti Suzuki. 

Maruti has been at the forefront of the Indian automobile market regarding sales and competitively priced models. The brand has an impressive range of small-segment cars like the Alto K10, S-Presso, Celerio, WagonR, and Ignis. 

These models dominated the market for years, but the rising manufacturing costs and strict emission and safety norms have impacted the pricing for these models. Additionally, the launch of micro SUVs or subcompact SUVs from brands like Hyundai and Tata has further affected the sales performance of small vehicles. 

Data from PTI revealed that the entry-level cars under Rs 5 lakh secured only 25,402 units in sales in FY2025 compared to 9,34,538 units in FY2016. It is important to note that the competitive pricing strategy for under Rs 5 lakh hatchback cars is not so attractive for customers nowadays. Instead, they are focusing more on buying premium segment hatchback models. Considering this industry shift, Maruti Suzuki aims for government support to revive the declining small-segment cars. 

If we look at the sales performance of small-segment Maruti Suzuki cars in May 2025, we will find the automaker sold only 6,776 units of Alto K10 and S-Presso, which was 9,902 units in May 2024. Additionally, other models in the category, including Baleno, Celerio, Dzire, Ignis, Swift, and WagonR, sales also dropped to 61,502 units from 68,206 units in May 2024. 

In India, the share of small cars in the passenger vehicle market was recorded at 47.4% in FY2018 and 46% in FY2019. While it also showcased a modest improvement with a market share of 46.5% in FY2020, since then, it has been on a continuous decline. In FY2021, the segment market share dropped to 45.6%, 37.5% in FY2022, 34.4% in FY2023, and 27.7% in FY2024.

Partho Banerjee, Maruti Suzuki India's Senior Executive Officer for Marketing & Sales, stated that the enhanced regulation for passenger vehicles has led to increased parking for small-segment cars, impacting those customers who want to upgrade from two-wheelers to entry-level four-wheelers.

Partho also urged that if the government aims to fuel growth in the automotive industry, it must understand how to boost the share of small cars in the automobile market. He added that some incentives can be required to allow customers to shift from two-wheelers to four-wheelers.