At Maruti Suzuki, small cars are back in the driver’s seat
Subscribe to enjoy similar stories. Maruti Suzuki India Ltd’s sales volume update for December sprung a positive surprise on small, entry-level cars, which saw 29% year-on-year growth to 62,324 vehicles. This is much higher than the 21% year-on-year growth in the company’s utility vehicle (UV) sales even though the base for both segments was more or less the same.
In the context of the ongoing trend towards UVs and other premium vehicles, the superior growth in small cars was entirely unexpected. If the trend continues, Maruti's stock could regain some of its lost momentum. It’s important to note, however, that December was the first month in FY25 in which small cars posted year-on-year sales growth.
The segment is hugely important for the company, accounting for 50% of its total passenger vehicle sales in India in the first nine months FY25 (April-December). Overall sales numbers for Maruti were flat at 12,75,634 units over this period, despite 15% growth in UVs, as sales of small cars dropped 10%. Also read: Weak rupee a new worry for paint companies Small cars are preferred by first-time buyers, especially in rural areas, because of their low prices.
Maruti’s high growth rate in this segment may be another sign of a recovery in demand in the rural economy. Maruti’s management also alluded to the higher sales in rural areas during the festival season in an earnings call announcing its results for the first half of FY25. While increased rural demand may have played a part in ensuring higher volumes, the company’s efforts to revitalise the small-car segment shouldn't be underestimated.
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