Demand for small cars likely to come back in second half of 2026, says Maruti Suzuki

After years of degrowth in the industry’s small car segment, India’s largest passenger car maker Maruti Suzuki is expecting a turnaround in the segment in 2026 with an improvement in the affordability factor. The share of small cars or hatchbacks has been continuously eroding in recent years and sport utility vehicles have been driving the growth of overall passenger vehicle sales.

“Sales of small cars have been declining primarily due to the affordability factor and this should improve going forward. There could be a turnaround in this segment somewhere around the second half of 2026,” Shashank Srivastava, senior executive officer for sales and marketing at Maruti Suzuki told reporters today.

The small cars segment has been among the most impacted after the pandemic. One of the major reasons was the disproportionate increase in the cost of vehicles in the segment. “The prices of models in this segment have gone up much higher than the income levels because of various factors such as the increase in commodity prices and regulatory stringency,” he said.

Going forward, Shashank expects price hikes in this segment to moderate. “If the income levels go up as is expected when the economy grows faster, the affordability factor, which resulted in the lower sales of hatchbacks, should become better. We expect that in 2026, we could see some sort of uplift again in this segment. This projection has been made based on the affordability factor, demographics and economic growth projections,” he added.

Maruti Suzuki Chairman RC Bhargava had earlier noted that the growth of small cars is essential for the sustained growth of the domestic passenger vehicle market. The share of small cars or hatchbacks has shrunk to around 28% in the passenger vehicle market with utility vehicles accounting for more than 50% of sales.

The company believes the small car segment is required to attract more first-time buyers. “The future growth of sedans and SUVs will come from small cars. We will not get large growth without growing the small car market,” Bhargava had said earlier. The de-growth in the small car segment has been a major reason for low single-digit sales expectations for the passenger vehicle segment in the next financial year.

Meanwhile, India’s second-largest carmaker Hyundai Motor said the small car segment is big, and it cannot be ignored. “The trend of small car share coming down will continue and the share will be taken by SUVs. When it will stop, is very difficult to say. Even at 25 percent of 4 mln units, it is big. I don’t think we can choose to ignore it,” Tarun Garg, chief operating officer of Hyundai Motor India, said.