Tuesday, June 03, 2025
By Kamal Swami
Small Car Sales Drop: Maruti Seeks Govt Action
For years the small car segment in India had been the key player of the Indian car market, recording high sales every year. Unfortunately, in the last few years, there has been a dramatic decline in sales in the segment. This decline has been due to sudden shift of buyers towards SUVs and crossover. Despite being the segment leader, Maruti Suzuki the country’s leading car manufacturing company is now seeking government intervention to help revive the ailing category.
According to the sales data reported by PTI, entry-level cars priced below Rs 5 lakh have a sudden dip in sales—from 9.34 lakh units in FY16 to just 25,402 units in FY25. These figures show a dramatic shift in the automotive market, with small cars losing their charm. Maruti Suzuki, which dominated the segment with models like the Alto K10, S-Presso, WagonR, Celerio, and Ignis, is now struggling with slowing demand. In May 2025, sales of the Alto K10 and S-Presso dipped to 6,776 units—down from 9,902 units in the same period last year. Similarly, compact car sales comprising Baleno, Celerio, Dzire, Ignis, Swift, and WagonR dropped to 61,502 units from 68,206 units in May 2024.
Industry data reveals that the market share of small cars in India’s overall passenger vehicle segment is constantly undergoing a steady decline—from 47.4% in FY18 to just 27.7% in FY24.
Speaking at a virtual press conference, Partho Banerjee, Senior Executive Officer (Marketing & Sales) at Maruti Suzuki India, considered the rising regulatory costs as the main reason for sales in the small car segment. According to him, these regulatory costs have pushed vehicle prices beyond the reach of budget-conscious buyers. “With enhanced regulation, prices of small car models have increased significantly, impacting buyers who want to upgrade from two-wheelers to entry-level cars,” Banerjee said.
He urged the government to introduce incentives for the small car segment, focussing that such support could help two-wheeler owners upgrade to four-wheelers and, in turn, boost overall auto industry growth. “If the government wants to fuel the growth of the auto industry, they need to understand where the problem lies and how to increase the size of the pie,” he added. As the small car segment faces continued pressure, industry experts agree that targeted policy interventions may be crucial in reversing its declining fortunes.
