India Could Loosen Small Car Fuel Efficiency Standards After Maruti’s Push: Report

As per a new report, India is exploring relaxed fuel efficiency norms for small cars following lobbying by Maruti Suzuki.

The move will address declining hatchback sales amid a surging demand for SUVs.

Small Car Challenges

Small cars, vital to Maruti’s dominance, now account for under 50 per cent of its 1.7 million vehicle sales last year, down from two-thirds two years ago. Models like the Alto and Wagon-R are losing ground.

The government shares concerns over this trend. A senior official noted that falling small car sales could hinder overall passenger vehicle market growth, prompting a rethink of regulations.

Current CAFE Norms

India’s Corporate Average Fuel Efficiency (CAFE) norms tie permissible CO2 emissions to vehicle weight for cars under 3,500 kg. The proposed change would ease limits for cars under 1,000 kg, reducing compliance pressure.

Small cars emit less CO2 due to their size and require fewer materials and energy to produce, making them environmentally friendly. Relaxed norms would lower the need for costly electrification in this segment.

Industry Implications

Easing norms would benefit carmakers like Maruti, with 10 of its 17 models under 1,000 kg. Hyundai, JSW MG Motor, Renault, and Toyota, with at least one small model, could also gain.

With new norms set for April 2027, the government’s plan could revive small car sales while supporting eco-friendly production. Yet, ensuring equitable rules will be key to maintaining industry harmony.

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