Small Cars may Make a Comeback by 2026, Says Maruti Suzuki Chairman RC Bhargava
Maruti Suzuki chairman RC Bhargava believes that as the income of customers at the entry level increases, and scooter and motorcycle owners start upgrading, the sales of small cars will rebound.
Small cars may make a comeback by 2026, said Maruti Suzuki chairman RC Bhargava in an interview. He does not believe that two-wheeler and first-time car buyers have become aspirational and are moving to mid-sized cars and SUVs.
While India saw record car sales in FY24, it saw the surge of SUVs. Sales of small cars took a beating. But if Bhargava is to be believed, it is not a concerning trend for the small car category.
He believes that as the income of customers at the entry level increases, and scooter and motorcycle owners start upgrading, the sales of small cars will rebound. “Vehicle prices at the entry level went up much faster than income levels of buyers the last few years, which impacted demand. Maybe by 2026, the impact of these high prices will be absorbed by the increase in the purchasing power of people in that category. The slide will get arrested,” said Bhargava in an interview to The Economic Times.
Two-wheeler buyers are back in the market and they will eventually graduate to small cars. He explained that the aspiration of a two-wheeler buyer is that he wants to buy a car. The two-wheeler buyer is not delaying buying a car because he wants to pick an SUV straightaway. “He does not have the money,” said Bhargava.
Rise in input costs, insurance charges, road taxes and transition to safety and emission norms hiked the price of small cars and two-wheelers. This in turn hit demand. Sales of small cars fell 12 per cent in FY24, even as the passenger vehicle sales increased 8.7 per cent. The demand for PVs was driven by an appetite for SUVs. Official numbers are yet to be released by the Society of Indian Automobile Manufacturers (SIAM).
He also spoke about electric vehicles and said that if a car is being charged using power generated from coal, then it will not help in reducing carbon emissions. He said technologies such as biofuel, ethanol and CNG are required to lower emissions.
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