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In a pointed commentary on the state of India's automobile market, Mr Bhargava, Chairman of Maruti Suzuki, has made a compelling case for a structural rethinking of taxation on smaller cars. Stressing the crucial role small cars play in increasing vehicle penetration across the country, he warned that without a revival of this segment, growth in the auto industry will remain subdued.
Despite Maruti Suzuki reporting its best performance ever in FY25, Mr Bhargava acknowledged that the domestic market remains soft. "Domestic sale growth was only 3%, while the industry as a whole grew at 2.6%. For a country with just 34 cars per 1,000 people-among the lowest in the region-such modest growth is clearly inadequate if we hope to improve overall penetration," he stated.
Also Read: Maruti Suzukis Q4 Net Profit Takes A Dip, Citing Higher Expenses
He pointed out that SIAM (Society of Indian Automobile Manufacturers) expects the growth trajectory to remain tepid, projecting just 2-3% this year. While Maruti Suzuki expects to outperform the industry average, much of its growth will be led by exports, which rose 17% last year. The company now accounts for 43% of India's passenger vehicle exports and expects a growth of 20% this year. "Exports will be the main driver of our production and growth going forward," Mr Bhargava said.
However, he expressed deep concern about the declining affordability of small cars in the domestic market. "Only 12% of Indian households earn Rs 12 lakh or more annually. Car ownership remains concentrated within this sliver of the population. The sale of small cars, which constitute 88% of the market, declined by 9%-a worrying sign," he noted.
Also Read: Kia India Achieves Production Of 15 Lakh Units From Anantapur Plant
Mr Bhargava challenged the prevailing industry narrative that consumers are simply opting for SUVs instead of small cars. "It's a fallacy to think that people are choosing SUVs over small cars. The truth is, a large number of people can't afford even the smallest cars. Only those who have the luxury of choice are opting for SUVs."
He strongly advocated for policy intervention. Citing the success of Japan's kei (K) cars, which enjoy a differentiated tax structure, Mr Bhargava argued that India, too, needs to introduce lower taxation for small cars. "Japanese K cars benefited from a separate, favorable taxation policy. We need something similar in India if we want the small car market to thrive," he said.
On the operational front, Maruti Suzuki continues to ramp up its capabilities. The company has earmarked a capital budget of Rs 8,000-9,000 crore for this year. At its Kharkhoda plant, work on the second unit is underway, with commissioning timelines dependent on market conditions. On this years product pipeline, Maruti is expected to launch one more SUV, besides the EV e-Vitara.
Also Read: Range Rover Electric Undergoes Winter Testing- Fresh Pictures
Maruti Suzuki is also expanding its CNG portfolio, aiming to grow from 6 lakh units sold last year to 7 lakh this year. The company is gearing up to have six airbags across all its products by the end of the year.
As for the future, Mr Bhargava reaffirmed Maruti's ambition of capturing 50% market share by 2031.
On the EV front, company's much anticipated first EV e-Vitara will now come in September'25 with a targeted production of 70000 EV this year. However Mr Bhargava stated that most of these will be exported. While the company has scaled down its initial plan from six to four models, Mr Bhargava acknowledged that the EV market needs to move faster but emphasized that infrastructure challenges remain. "Unless customers see tangible benefits in EVs and hybrids, uptake will remain limited. There is still a lack of component infrastructure-battery and parts manufacturing is yet to take off. Our first EV will be available from September 2025," he concluded.
Despite Maruti Suzuki reporting its best performance ever in FY25, Mr Bhargava acknowledged that the domestic market remains soft. "Domestic sale growth was only 3%, while the industry as a whole grew at 2.6%. For a country with just 34 cars per 1,000 people-among the lowest in the region-such modest growth is clearly inadequate if we hope to improve overall penetration," he stated.
Also Read: Maruti Suzukis Q4 Net Profit Takes A Dip, Citing Higher Expenses
He pointed out that SIAM (Society of Indian Automobile Manufacturers) expects the growth trajectory to remain tepid, projecting just 2-3% this year. While Maruti Suzuki expects to outperform the industry average, much of its growth will be led by exports, which rose 17% last year. The company now accounts for 43% of India's passenger vehicle exports and expects a growth of 20% this year. "Exports will be the main driver of our production and growth going forward," Mr Bhargava said.
However, he expressed deep concern about the declining affordability of small cars in the domestic market. "Only 12% of Indian households earn Rs 12 lakh or more annually. Car ownership remains concentrated within this sliver of the population. The sale of small cars, which constitute 88% of the market, declined by 9%-a worrying sign," he noted.
Also Read: Kia India Achieves Production Of 15 Lakh Units From Anantapur Plant
Mr Bhargava challenged the prevailing industry narrative that consumers are simply opting for SUVs instead of small cars. "It's a fallacy to think that people are choosing SUVs over small cars. The truth is, a large number of people can't afford even the smallest cars. Only those who have the luxury of choice are opting for SUVs."
He strongly advocated for policy intervention. Citing the success of Japan's kei (K) cars, which enjoy a differentiated tax structure, Mr Bhargava argued that India, too, needs to introduce lower taxation for small cars. "Japanese K cars benefited from a separate, favorable taxation policy. We need something similar in India if we want the small car market to thrive," he said.
On the operational front, Maruti Suzuki continues to ramp up its capabilities. The company has earmarked a capital budget of Rs 8,000-9,000 crore for this year. At its Kharkhoda plant, work on the second unit is underway, with commissioning timelines dependent on market conditions. On this years product pipeline, Maruti is expected to launch one more SUV, besides the EV e-Vitara.
Also Read: Range Rover Electric Undergoes Winter Testing- Fresh Pictures
Maruti Suzuki is also expanding its CNG portfolio, aiming to grow from 6 lakh units sold last year to 7 lakh this year. The company is gearing up to have six airbags across all its products by the end of the year.
As for the future, Mr Bhargava reaffirmed Maruti's ambition of capturing 50% market share by 2031.
On the EV front, company's much anticipated first EV e-Vitara will now come in September'25 with a targeted production of 70000 EV this year. However Mr Bhargava stated that most of these will be exported. While the company has scaled down its initial plan from six to four models, Mr Bhargava acknowledged that the EV market needs to move faster but emphasized that infrastructure challenges remain. "Unless customers see tangible benefits in EVs and hybrids, uptake will remain limited. There is still a lack of component infrastructure-battery and parts manufacturing is yet to take off. Our first EV will be available from September 2025," he concluded.
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