Maruti Suzuki Expects PV Sales To Grow 10% in FY27, Flags West Asia as Key Risk

Maruti Suzuki India Ltd expects India’s passenger vehicle industry to grow by around 10% year-on-year in the financial year 2026-27, supported by sustained demand momentum after GST rate cuts improved affordability, especially in the small car segment. However, developments in the West Asia conflict remain a key monitorable for the industry.

“The broad expectation is about 10% growth in this year as compared to the last year. And, of course, the situation is dynamic, but this is the initial expectation,” Rahul Bharti, Senior Executive Director of Corporate Affairs, Maruti Suzuki India, said during the company’s post-earnings analyst call.

Maruti Suzuki’s passenger vehicle market growth outlook is higher than that estimated by the Society of Indian Automobile Manufacturers. The auto industry body expects the segment to grow in the range of 5-7% in FY27, supported by higher income levels and lower ownership costs following the recent GST rate cut.

Bharti said the GST-led reduction in acquisition cost revived demand in the second half of FY26, particularly for vehicles in the 18% GST bracket. FY26 was a year of two distinct halves for the Indian PV industry. The market declined by about 0.4% in the first half, reflecting affordability pressure, especially in small cars. In the second half, led by the government’s GST reform, the PV market grew by 16.7% year-on-year.

For Maruti Suzuki, the recovery was sharper than the industry. The company’s domestic sales fell 5.6% in the first half, but grew 12.3% in the second half, marking a swing of about 17.9%.

Bharti said the recent GST reduction is a transformative factor for India’s passenger vehicle industry as it has lowered ownership cost and made cars accessible to a wider set of customers. This, he said, has set the industry on a sustained, long-term structural growth path by expanding the potential customer base.

Maruti Suzuki is also adding capacity to keep pace with demand. Bharti said Maruti Suzuki will use new plants that are being ramped up, with two facilities expected to have a combined steady-state capacity of 5 lakh units. Since these plants will take time to reach full capacity, the company expects around 2.5 lakh additional cars to be available in FY27 compared with the previous year.

Maruti Suzuki is expanding capacity at Kharkhoda in Haryana and setting up a new unit in Gujarat. Chairman R C Bhargava said the company will incur record capital expenditure of around ₹14,000 crore in the current fiscal, its highest ever, as both projects progress simultaneously. 

The capacity addition comes at a time when Maruti Suzuki’s sales growth has been constrained by production availability. As of the end of FY26, the company had around 1.9 lakh pending customer orders, including nearly 1.3 lakh orders in the small car segment. Dealer inventory was also low at around 12 days, indicating strong underlying demand. 

Bharti said the demand recovery was not restricted to rural markets, which continued to perform well through the year. Urban markets also recovered after the GST reform. During the second half, the company saw higher showroom traction from two-wheeler upgraders and an increase in first-time buyers.

Even as SUVs continued to dominate industry growth, Bharti pointed out that the highest-selling passenger vehicle in FY26 was the Maruti Suzuki Dzire, a sedan in the 18% GST bracket. The company also strengthened its presence in the mid-SUV segment during the year, helped by the launch of the Victoris.

“The Victoris has seen strong customer acceptance and is the fastest model in our portfolio to cross 50,000 cumulative sales,” Bharti said.

He added that while GST reform helped revive entry-level demand, the Victoris contributed meaningfully to Maruti Suzuki’s growth in the mid-SUV segment, allowing the company to compete more strongly in one of the industry’s fastest-growing categories.

The company also launched its first battery electric vehicle, the e Vitara, during the year. Bharti said the initial response for the model has been encouraging. The e Vitara reflects the company’s preparedness for the gradual transition to electric mobility, while it continues to follow a balanced, multi-powertrain pathway to reduce fleet carbon emissions, he added.

Exports remained another important growth driver for Maruti Suzuki in FY26. The company was India’s top passenger vehicle exporter for the fifth consecutive year and accounted for 49% of total PV exports from the country. 

Despite the uncertainties caused by geopolitical tensions, the company remains confident about India’s economic resilience. It expects war-related challenges to affect the business environment in the short term, but believes such disruptions are likely to ease as conditions improve.

Maruti Suzuki closed FY26 with record total sales of 24,22,713 units, compared with 22,34,266 units in the previous year. Net sales rose 20.2% to a record ₹1,74,369.5 crore, while net profit stood at an all-time high of ₹14,445.4 crore, compared with ₹14,297.6 crore in FY25.