Share of Small Cars to Grow Significantly Faster: Maruti's RC Bhargava

Maruti Suzuki expects the share of small cars in India's passenger vehicle market to grow significantly faster over the next five years than it did in the previous five years, Chairman RC Bhargava said, signalling a stronger outlook for a segment that has faced a prolonged slowdown.

The country's largest carmaker is reassessing the likely growth of the car market following the recent goods and services tax (GST) reforms, which Bhargava said had given a fresh impetus to the automobile industry.

“The company is in the process of making an accurate estimate as possible of the likely growth of the car market in the next five years, a happy exercise necessitated by the GST reforms. This could lead to some changes in our long-term production and sales targets,” Bhargava said in his address to shareholders at the company's annual general meeting.

“Today we are estimating that the car industry will grow to 6.1 to 6.3 million by 2031 and that the share of the small car market will grow significantly faster than what had happened in the last five years.”

Small Car Sales Rebound: The Numbers Behind the Optimism

The improved outlook comes after a sharp recovery in small-car sales. Maruti Suzuki's small-car sales grew 17% in the second half of the previous financial year and accelerated to 35% in the first quarter of the current year, Bhargava said. According to MD and CEO Hisashi Takeuchi, small-car volumes rose 63% between April and July on a year-on-year basis, and its market share in the segment stood at 83%.

The company’s overall sales grew 38% in the first quarter, compared with 28% growth for the industry.

Bhargava said the company was now making as accurate an estimate as possible of the likely growth of the car market over the next five years, with the change in outlook following the GST reforms. “This could lead to some changes in our longer-term targets,” he said.

The rebound in small cars has come after several years of weaker demand for the segment, during which Maruti Suzuki adjusted its production capacity to reflect the changing market.

Capacity Crunch

Bhargava said the company ended March with 1.9 lakh pending bookings because it lacked manufacturing capacity for some in-demand models. He attributed this to adjustments made over several years to cater to falling small-car demand and the growth of the SUV market.

The carmaker is now making its new production lines flexible enough to allow it to change platforms and models as demand shifts. “This is already showing results,” Bhargava said, pointing to the increase in small-car sales during the first quarter.

The change in demand has also prompted Maruti Suzuki to reassess its longer-term production and sales plans. The company is expanding manufacturing capacity as it prepares for higher demand across the market. Its installed capacity is expected to reach 2.9 million vehicles by the end of 2026-27 and 3.65 million by the end of 2030-31.

FY26 Targets

Maruti Suzuki is also working to expand its presence in alternative fuel vehicles. CNG car sales rose 22% to 7.46 lakh units in 2025-26, while sales in the first quarter of the current year grew 58% to 2.2 lakh units. The company is targeting sales of 9 lakh CNG cars this year.

Bhargava said the company’s assessment of future demand would take into account the broader economic impact of the GST reforms. He said the reforms had given a new impetus not only to the automobile industry but also to several other sectors of the economy.

Maruti Suzuki expects the stronger demand environment to support growth in the car market, while its flexible production system is intended to allow the company to respond more quickly to changes in consumer preferences.