Maruti Suzuki plans to revive small car segment by 2025-26

Maruti Suzuki remains committed to the small car segment, expects recovery soon

India’s leading carmaker Maruti Suzuki has reiterated its commitment to the small car segment despite the recent decline in sales. Chairman RC Bhargava said at the company’s 43rd Annual General Meeting (AGM) that the company expects the small car segment to revive by FY 2025-26.

Bhargava stressed the importance of low-cost and small cars in India’s economic and social landscape. “We firmly believe that low-cost and small cars are necessary in our economic and social conditions. A temporary setback in demand will not change our strategy,” he said.

The small car market has faced challenges recently, with Maruti Suzuki’s sales in the subcompact and compact car segment falling by about 12% from April to July 2024 compared to the previous year. In contrast, the company’s utility vehicle segment sales grew by 16.44% during the same period. The successful launch of models such as the Jimny and Fronx in mid-2023 has contributed significantly to Maruti’s growth in the SUV segment.

Key small car models such as Baleno, Celerio, Dzire, Ignis, Swift and WagonR remain at the core of Maruti’s strategy, with prices generally ranging between Rs 50-80 lakh. The company plans to strengthen its small car lineup and expand its production capacity, and the vehicles produced at the new Kharkhoda plant are expected to support this goal.

Besides, Maruti Suzuki is preparing to enter the electric vehicle market with the launch of its first all-electric model in India, the eVX. The model is scheduled to be produced at the newly acquired Suzuki Motor Gujarat plant in January 2025. The eVX is expected to compete in the mid-size electric SUV market with rivals including the Tata Nexon EV, the upcoming Hyundai Creta EV and the Honda Elevate EV.

Despite a 7.4% year-on-year (YoY) production growth in the first quarter of 2024-25, Maruti Suzuki’s sales rose by only 1.2% to a total of 4,27,000 units. The company, which commands a 40% share of the Indian automobile market, has not disclosed specific information about pending orders or unsold inventory. The slowdown in sales is due to lower consumer demand and higher dealer inventory. The Federation of Indian Automobile Dealers Association (FADA) reported unsold vehicles at around 7,30,000 units, while the Society of Indian Automobile Manufacturers (SIAM) estimated the unsold vehicles at around 4,00,000 units.

Bhargava highlighted the company’s efforts to address inventory challenges and strengthen sales and service network, especially in rural areas and small towns. The strategy aims to improve accessibility and align production processes with market demand to mitigate the risk of overproduction or shortages.

Maruti Suzuki is also working on expanding its export business, expecting to export more than 300,000 units this year. The company plans to export its first batch of electric vehicles to Europe and Japan, with the Fronx model already shipped to Japan.

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