India’s Car Market:

MARUTI

Revives Small Car Production Despite SUV Boom

, the country’s largest carmaker, is prioritizing production of mini cars such as the Alto and S-Presso, even at the cost of cutting output of larger models. The company believes there is still growth potential in the small car segment, which has shown signs of revival following GST rate cuts and aggressive discounts. December sales nearly doubled year-on-year, but questions remain about whether the momentum can be sustained in a market increasingly dominated by SUVs. 1. December Surge in Mini Cars - Dispatches of mini cars rose 92% YoY to 14,225 units in December. - Domestic sales grew 36% YoY to 192,115 units, supported by mini cars and utility vehicles. - Utility vehicle portfolio also expanded strongly, up 33% YoY to 73,818 units. 2. Production Strategy - Maruti is ramping up mini car production to meet retail bookings. - Limited capacity means output of compact vehicles is being sacrificed. - Executive Partho Banerjee emphasized balancing production “turn by turn” to serve customers. 3. Pricing and Demand Drivers - GST cuts and steep discounts since September have boosted demand. - Maruti is evaluating whether to continue with lower prices as sales momentum improves. - The company has an annual production capacity of 2.6 million vehicles across four plants in Haryana and Gujarat. 4. Market Context – SUV Dominance - Since 2019, SUVs have grown from 20% to 50% of cars on Indian roads. - Small cars have suffered, with demand declining steadily until recent GST rationalization. - SIAM data showed mini cars grew just 3% YoY in Oct–Nov, versus 17% growth for compact SUVs. 5. Outlook and Challenges - December’s strong growth highlights potential revival, but sustainability remains uncertain. - Festivals and supply constraints could impact near-term momentum. - Long-term recovery of mini cars will depend on pricing discipline, consumer affordability, and balancing SUV demand trends.