Once essential to India’s passenger car market, small cars are currently experiencing a sharp decline.
Concerned about this trend, Maruti Suzuki is pleading with the government to provide incentives in order to revitalize the small car market.
Maruti Suzuki Urges Government Support as Small Car Market Faces Sharp Decline in India
Entry-level automobile sales (less than ₹5 lakh) have drastically decreased, falling from 9,34,538 units in FY16 to just 25,402 units in FY25.
Sales of Maruti Suzuki’s small Alto and S-Presso models fell from 9,902 units in May 2024 to 6,776 units in May 2025.
Additionally, sales of compact models such as the Baleno, Celerio, Dzire, Ignis, Swift, and WagonR decreased, totaling 61,502 units in May 2025 as opposed to 68,206 the year before.
Maruti Suzuki Senior Executive Officer Partho Banerjee blames the decline on rising regulatory expenses.
Banerjee stated: “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…”
He added: “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.”
Small Cars Peaked at 46.5% Market Share in FY20, Down from 47.4% in FY18
In FY18, small cars accounted for 47.4% of the passenger vehicle market; in FY20, that percentage reached a peak of 46.5%.
The segment’s share has steadily decreased since FY20, falling by 45.6% in FY21, 37.5% in FY22, 34.4% in FY23, and 27.7% in FY24.
China’s export restrictions on rare earth magnets have not had any immediate effects, according to Maruti Suzuki.
The industry is collaborating with the government to acquire end-user certifications, according to Rahul Bharti, Senior Executive Officer (Corporate Affairs).
More than 90% of the world’s rare earth magnet processing, which is essential for clean energy, appliances, and automobiles, is done in China.
With sales of 4 lakh units compared to 3,32,585 units in FY25, Maruti Suzuki intends to increase exports by 20% in FY26.
Bharti said: “Our target for this year (FY26) is at least four lakh units, which implies a growth of at least 20 per cent over FY25.”
With a robust demand in Africa, Latin America, Southeast Asia, and Japan, the company presently exports to almost 100 countries.
Japan has swiftly emerged as Maruti Suzuki’s second-largest export market, aided by the Fronx and Jimny models.
Bharti added: “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.”
The most popular export models in FY25 were Fronx, Jimny, Baleno, Swift, and Dzire.
In FY25, South Africa, Saudi Arabia, Chile, Japan, and Mexico were among the top export destinations.
