Maruti Suzuki Warns of Flat Growth, Small Car Sales Collapse

Maruti Suzuki, India’s largest carmaker, has issued a cautionary note on the future of the domestic market, projecting minimal growth in the current financial year and highlighting deep-seated challenges in the small car segment. Following the release of its fourth-quarter earnings on Friday, Maruti’s management signaled that FY26 could see domestic passenger vehicle industry growth slow to just 1–2%, far below the historical trend.

“Overall demand is not growing,” Maruti’s management stated during the post-results conference call, pointing specifically to a concerning trend: the declining affordability and demand for small cars, once the backbone of India’s automotive boom.

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The company’s own domestic sales growth was muted in FY25, registering just a 3% increase — a far cry from the double-digit expansion rates seen in previous decades. Management attributed the stagnation primarily to affordability challenges among middle-income buyers, compounded by inflation, rising cost of living, and broader economic pressures.

Notably, the small and mid-sized car segment — historically Maruti’s stronghold — has seen a dramatic shift. A decade ago, vehicles from these segments accounted for 64% of all cars sold in India. Today, they represent only 35%, according to industry data shared during the call.

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Several factors are driving this transformation. While inflation and high ownership costs have squeezed budgets, the proliferation of ride-hailing services has offered urban consumers an alternative to car ownership. Moreover, aspirations have shifted, with many first-time buyers now preferring SUVs over compact hatchbacks, a segment where Maruti has had to play catch-up against newer rivals.

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The company’s cautious stance raises broader questions about the future trajectory of India's auto industry. After a decade of rapid expansion fueled by a rising middle class, car ownership no longer appears to be the definitive milestone it once was, particularly among younger demographics.