Maruti Suzuki urges Indian government for incentives to revive small car sales

The country'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 gradual decline with affordability factor coming into play.

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

Entry cars priced below Rs 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 per cent in FY18, and 46 per cent in FY19. In FY20, it improved marginally to 46.5 per cent and has been on a decline since.

In FY21, it was 45.6 per cent, 37.5 per cent in FY22, 34.4 per cent in FY23 and 27.7 per cent 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 per cent 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 per cent over FY25," Bharti said.

He noted that the company's exports are fairly diversified with 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 still 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 per cent and the golden mark of 50 per cent is close," Bharti stated.

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

The company accounted for nearly 43 per cent 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.