Maruti Suzuki Says Capacity Constraints Limiting Small Car Sales

India’s largest carmaker Maruti Suzuki on Friday said demand for small cars has remained robust following the GST 2.0 reform, but production constraints are limiting dispatches. The management noted that the situation is expected to persist for a few more months, even as the company accelerates capacity expansion.

“Coming to the performance of the small car, we have got production constraints,” said Partho Banerjee, senior executive officer for Marketing & Sales at Maruti Suzuki. The automaker is operating plants at nearly maximum utilisation. 

He noted that while dispatches in the entry-level segments were stepped up in December, the company has since recalibrated production to balance demand across other segments. 

Maruti Suzuki’s total domestic passenger vehicle dispatches in January came in at 174,529 units, almost flat from the year-ago period. Dispatch of utility vehicles rose 16% in the year to 75,609 units, but the dispatch of models in the mini and compact segment fell 10.5% on year to 87,006 units.

“In the month of December, we had increased the dispatch by 49% in the Mini and Compact segment. So, this month [January], we are now trying to balance it out and we are trying to give more focus to the utility vehicles,” he said.

According to Banerjee, the company is following a rolling production strategy to prevent excessive waiting periods in any single category. “Again, I would like to see the totality because one month, we try to increase one segment. Next month, we try to calibrate and cater to another segment of customers,” he added.

Bookings grew by almost 25% in January and have close to 1.75 lakh pending bookings. The automakers' actual stick available at dealerships is just around three days. The management said they are maintaining about 10 days of inventory across the network, but nearly 6–7 days of that is vehicles in transit.

Maruti Suzuki has also launched a price protection scheme in January to retain first-time consumers coming to the market amid supply challenges. 

"We are seeing that first-time customers who are coming to the four-wheeler segment, we need to give them the opportunity to upgrade. Hence, we have given a price protection scheme that if you book your car, we are going to serve you. There will be no price increase because there is huge pressure on the commodity prices," he said.

Recently, Maruti Suzuki’s management said the demand in the small car segment has returned to “healthy black” growth after several quarters of contraction. The revival is being driven largely by first-time buyers, supported by stable pricing and the post-GST reform environment.

To address the supply bottleneck, Maruti Suzuki is fast-tracking capacity additions across multiple locations. Banerjee said the company expects the current constraints to ease gradually as new lines come on stream. “But yes, we need to live with this production constraint for a few more months,” he said.

The automaker is preparing to add nearly 500,000 units of annual manufacturing capacity over the next year. This includes the second line at its Kharkoda facility, scheduled to become operational by April 2026, and the commissioning of the D Line, the fourth manufacturing line at its Gujarat plant. Each facility is expected to add around 250,000 units of annual capacity.

The company has also announced plans for a second greenfield plant in Gujarat, signalling a longer-term capital commitment. The capacity expansion plans were accelerated after the GST reform, as demand across the passenger vehicle market rebounded more sharply than anticipated.