Maruti Suzuki expects small car segment to recover by 2026-27

2 May 2024 , 11:30 AM

 A senior company executive of Maruti Suzuki stated that the company anticipates a resurgence of the small car segment in the local market by 2026-end or 2027, following years of hardship due to affordability concerns and the assault of SUVs. 

The company believes that compact car sales will benefit from the recovery in the two-wheeler market, which has also been declining since 2018–19.

“In a virtual interaction, Maruti Suzuki India Senior Executive Officer, Marketing & Sales, Partho Banerjee stated that the contribution of the small (car) segment has decreased slightly as a result of the SUV segment’s increased contribution to 53.6% of the total (passenger vehicle) industry.”

He said that although there has been a “steep increase in the prices of hatchbacks” because of a number of factors, such as safety and emissions rules, the “affordability” of small car consumers has not increased to the same degree.

“As a result, there has been a drop in the contribution of the hatchback segment but our take is that this hatchback segment will again come back…we expect that, maybe by 2026-end or 2027 we will again be seeing a growth in the hatch segment and this market will revive,” Banerjee stated.

He acknowledged that pricing is still a “major challenge” but added that the compact vehicle market can benefit from the upturn in two-wheeler sales.

“The two-wheeler market is experiencing a resurgence. History has shown us that anytime the two-wheeler sector experiences a renaissance, the four-wheeler industry likewise experiences a lag. We therefore have high hopes for an improvement in the hatch segment,” Banerjee continued.

He claimed that once the affordability factor improves, it will only be a matter of time until the small vehicle market recovers.

Confident that the category would return with a bang, Banerjee stated, “In India, there are only 32 cars per 1,000 people. The number of cars per 1,000 people in all developed markets, such as Japan, is 600, and this trend is continuing. It is anticipated that by 2030, there will be 44 automobiles for every 1,000 people.

He stated, “It goes without saying that more people will switch from two-wheelers to four-wheelers. Therefore, I don’t see any reason why this tiny car market won’t rebound. It’s just a question of time.”

In FY18 and FY19, compact cars accounted for 47.4% and 46%, respectively, of the PV market in India. It slightly improved in FY20 to 46.5% and has come down since.

The percentage was 45.6% in FY21, 37.5% in FY22, 34.4 % in FY23, and 27.7% in FY24.

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