The small car market in India, which has been diminishing on a rather rapid scale lately, might make a comeback by 2026, Maruti Suzuki chairman RC Bhargava believes, as per a recent report from ET. In the recently concluded FY2024, the Indian passenger vehicle market witnessed its highest-ever sales, led by SUVs as small cars continued to struggle.
Small-car sales observed a 12 percent decline in FY24 as against the 8.7 percent overall growth in the passenger vehicle industry driven by SUV demand. The share of small cars in overall vehicle sales dropped to 27.7% from 34.4% in FY23 and 47.4% in FY18. Maruti Suzuki’s majority sales come from the small car segment but the company has lately started to expand its SUV portfolio to keep up with the growing demand for the category.

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Bhargava believes that the rising income levels of the entry-level consumers and a shift from two-wheelers to entry-level cars will lead to a comeback for the segment in two years. Currently, the segment offers 14 models, down from a record 31 in FY16, reflecting the market’s evolving dynamics.
Anticipating a turnaround, he highlighted that two-wheeler buyers are gradually returning to the market and are likely to transition to small cars over time. He noted that the aspiration of the prospective buyers remains owning a car, not necessarily an SUV.
Factors such as increased input costs, insurance charges, road taxes, and compliance with emission and safety norms contributed to price hikes, have also affected demand in the small-car and two-wheeler segments. In fact, several OEMs such as Nissan, Honda, and Volkswagen have already eliminated their presence in the small-car market in recent years.
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