Maruti Suzuki predicts that small cars will make a comeback in the coming years

Maruti Suzuki, the country's largest carmaker, anticipates a revival in small car sales in the local market over the next few years, driven by economic growth and rising income levels among entry-level customers. Managing Director Hisashi Takeuchi envisions approximately one million premium hatchbacks to be sold in the country by FY31, reflecting an increase from the 680,000 units sold in the last fiscal year.

Despite a recent decline in small car sales by 12% in FY24 within a growing passenger vehicle industry, Maruti Suzuki remains optimistic about capturing growth opportunities in the segment. With many competitors stepping away from the small car market, Maruti Suzuki maintains a significant market share of 69% in small cars, indicating a strong position to benefit from the expected market resurgence.

Challenges such as price increases at the entry-level surpassing income growth of buyers in recent years have impacted demand. Factors like rising input costs, insurance charges, road taxes, and regulatory changes have contributed to higher prices, affecting the sensitive small car and two-wheeler segments. Consequently, several automakers like Nissan, Honda, and Volkswagen have exited the small car market in India, reducing the total models offered to 14 from a peak of 31 in FY16.

Acknowledging that the reduction in available models has influenced demand, Takeuchi remains hopeful about future growth prospects. He emphasizes that India's move towards development by 2047 will likely drive increased economic activity and heightened demand for automobiles in the coming years. With a significantly lower car ownership rate compared to developed nations, India presents significant potential for car aspirants, especially in the hatchback segment, deemed as an entry point for most customers.

Maruti Suzuki's commitment to the hatchback segment is evident through investments in developing the new Swift and prioritizing safety features such as six airbags standard in all variants. Emphasizing the significance of catering to diverse customer segments, the company is focused on re-energizing the hatchback segment as it plays a crucial role in the Indian passenger vehicle market. The new Swift, manufactured at the Suzuki Motor Gujarat plant, will not only cater to the domestic market but also serve overseas customers. Maruti Suzuki's strategic approach reflects confidence in India's growth trajectory and commitment to meet evolving customer demands.

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