Maruti Suzuki Sees Gradual Recovery in Small Car Segment Amid SUV Growth

Maruti Suzuki India expects a gradual recovery in the small car segment, despite a recent decline and the growing dominance of SUVs in the Indian market. The company, India's largest carmaker, is betting on improved affordability, policy support, and pent-up demand to drive this revival.

Key Highlights

• Maruti Suzuki expects small car segment recovery despite recent decline
• Share of sub-₹10 lakh cars dropped to 6 percent in FY26
• SUVs now make up 67 percent of passenger vehicle sales
• Maruti Suzuki's market share fell from over 50 percent in FY19 to 40 percent in FY26
• Company plans capacity expansion and dual focus on small cars and SUVs

Small Car Segment Trends

Chairman R. C. Bhargava stated that the drop in small car demand over the last six years is not permanent. He believes that as affordability and policy support improve, the segment will recover. Bhargava noted that the share of small cars in Maruti Suzuki's total volume has decreased since 2018–19. This decline led the government to consider reducing GST rates for small cars.

According to JATO Dynamics India, the share of sub-₹10 lakh cars fell to 6% of total sales in FY26, down from 12.5% in FY24. SUVs now account for 67% of passenger vehicle sales. Industry data shows that entry-level and small cars, mainly hatchbacks, have seen volumes fall by 35–45% compared to pre-pandemic highs. Rising prices, stricter regulations, and higher ownership costs have made it harder for first-time buyers to enter the market.

This shift has affected Maruti Suzuki more than other companies. The company’s domestic passenger vehicle market share dropped from over 50% in FY19 to about 40% in FY26. This change came as SUVs gained popularity and competitors expanded their offerings in higher segments.

Company Strategy and Market Outlook

Bhargava emphasized that India’s economic conditions still support the need for small, affordable cars. He said that a large part of the population relies on low-cost vehicles for mobility. He also pointed out that India’s per capita income does not allow most people to buy larger cars.

Bhargava highlighted that the current 18% GST bracket for small cars has addressed many concerns about affordability. He said the government has already done what was needed to support the segment, and further reduction in GST rates is unlikely.

Despite the decline, Maruti Suzuki sees early signs of recovery in entry-level demand. The company reported a waiting list of 190,000 people in India, with 30,000 waiting for small cars. Maruti Suzuki plans to continue investing in both small cars and SUVs. Senior Executive Officer Partho Banerjee said the company will expand its capacity, aiming for 500,000 units, with an initial ramp-up to 250,000 units. The company intends to maintain and increase its share of small cars, currently close to 60%.

Banerjee added that Maruti Suzuki will continue to serve both the 18% GST segment and the 40% GST segment, which includes SUVs. He noted opportunities to convert two-wheeler users to four-wheelers.

Investment and Risks

Bhargava said Maruti Suzuki is aligning its strategy with national priorities as exports increase. He noted that record investment is supporting capacity expansion in Kharkhoda and Gujarat. While demand and production remain steady, Bhargava identified fuel prices as a key risk, especially due to tensions in West Asia.