Maruti Suzuki remains committed to India's entry-level small car market despite the industry's growing focus on sport utility vehicles, saying affordable cars will remain critical to increasing vehicle ownership in the country.
The country's largest carmaker believes low car ownership levels and improving demand create a long-term opportunity for small cars, even as many automakers shift their focus to higher-priced models.
"If motorization has to happen in India, everybody cannot leapfrog straight to a Rs 15 lakh or Rs 20 lakh car," Partho Banerjee, senior executive officer for sales and marketing at Maruti Suzuki India, told Autocar India.
India has about 34 cars for every 1,000 people, and that figure needs to rise significantly as the market expands, he said.
The entry-level segment has struggled in recent years as stricter safety and regulatory requirements raised vehicle prices. Banerjee said the additional cost has a bigger impact on affordable cars than on premium models.
"If you add safety features like airbags to a car costing Rs 5 lakh, the cost percentage impact is vastly higher than on a car priced at Rs 25 lakh," he said.
He added that buyers in the segment remain highly price-sensitive and continue to prioritise fuel efficiency and overall ownership costs.
Maruti Suzuki, which holds more than 80% of India's hatchback market, expects the segment to recover after a prolonged slowdown. The company said demand has started improving from a low base.
Banerjee said Maruti's strategy remains focused on offering "the right product at the right price", balancing modern features with affordability instead of adding equipment that could make vehicles too expensive for first-time buyers.
Small hatchbacks still account for about 28% of domestic passenger vehicle sales and remain well suited to India's urban driving conditions because of their compact size and lower emissions, he said.
While the used-car market offers consumers another affordable option, Banerjee said competitively priced new small cars would continue to attract first-time buyers.
"Our fundamental philosophy remains unchanged: to provide the joy of mobility across segments," he said. "If you provide the customer with the right product at the right price, there remains a massive market waiting to be tapped."