“Even as we produce more SUVs and higher cost cars to cater to a different market segment, we will never forget the needs of the large numbers who cannot afford expensive cars,” Chairman RC Bhargava said in his message to shareholders.
04 Aug 2024 | 7959 Views | By Kiran Murali and Ketan Thakkar
Even as the small and affordable segment in the domestic passenger vehicle industry continues to shrink with most of the automakers exiting the space, Maruti Suzuki, India’s largest car maker, said it will remain committed to the needs of budget-conscious buyers.
"Even as we produce more SUVs and higher ...
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Even as the small and affordable segment in the domestic passenger vehicle industry continues to shrink with most of the automakers exiting the space, Maruti Suzuki, India’s largest car maker, said it will remain committed to the needs of budget-conscious buyers.
"Even as we produce more SUVs and higher cost cars to cater to a different market segment, we will never forget the needs of the large numbers who cannot afford expensive cars," Chairman RC Bhargava told shareholders in the company's annual report.
India's small and affordable market has been declining since the pandemic, with hatchbacks losing their market share steadily. Sport Utility Vehicles (SUVs) have been driving overall passenger vehicle industry growth and now account for around 50% of the industry volume.
Consumers for the entry-level, or small car market were the ones hit hard by the disproportionate increase in the cost of vehicles in recent years. The increase in the cost of small cars outpaced income growth, squeezing budgets and making vehicles increasingly out of reach for many.
Most of the car companies have altogether exited the entry-level or sub-Rs 5 lakh category, and are focusing on higher-margin SUVs. The share of entry-level is estimated to have shrunk dramatically to less than 1% last year from around 33% in 2015.
However, Maruti Suzuki’s management believes the small car segment will recover next year with improvements in the affordability factor. Bhargava believes the growth of small cars is essential for the sustained growth of India’s passenger vehicle market as it attracts more first-time buyers to the market.
"Our continued efforts to manufacture low-cost small cars has been in recognition of the economic condition of a large majority of citizens and their aspiration to own a comfortable and safe means of transport," Bhargava added.
Recently, Maruti Suzuki launched a new version of its popular hatchback Swift. "As a market leader, we took on us the responsibility to re-energise the hatchback segment at a time when this segment really needs a catalyst for growth," Managing Director and CEO H. Takeuchi said.
India's passenger vehicle volumes scaled a new high of 4.2 million units in 2023-24 to sustain its status as the third-largest car market globally. However, the growth rate of the industry has been moderating and is expected to moderate further to low single digits in the current financial year.
Highlighting the potential for growth in the Indian market, Takeuchi noted that only 3% of Indian people enjoy ownership of cars. "My dream, or rather my personal mission, is to deliver the ‘joy of mobility’ to as many Indians as possible," he added.
Meanwhile, Maruti Suzuki is also focusing on improving its offerings in the SUV segment as the carmaker fights to regain its 50% plus market share in the industry.
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