India's leading car manufacturer, Maruti Suzuki India Ltd, is making a strategic pivot to focus on its smallest vehicles. The company is prioritizing the production of mini cars such as the Alto and Spresso, even if it means reducing the output of larger models. This decision stems from a firm belief that this segment still holds significant growth potential in the world's third-largest automobile market.
December Sales Surge and Production Rejig
On Thursday, the New Delhi-based automaker revealed that its mini car portfolio is witnessing robust growth. Sales in December nearly doubled, prompting the company to increase production to fulfill retail bookings. This surge is largely attributed to the recent reduction in the Goods and Services Tax (GST) on these vehicles.
Dispatches of mini cars to dealers skyrocketed by 92% year-on-year in December, reaching 14,225 units. This impressive performance helped lift Maruti's total domestic sales by 36% to 192,115 units for the month. For context, the company's larger utility vehicle portfolio also grew, but at a slower pace of 33% to 73,818 units.
Partho Banerjee, Senior Executive Officer for Marketing and Sales, clarified that earlier wholesale data for October and November showed tepid numbers, but retail performance was strong. "We were doing pretty well with the retail numbers in the past two months," he stated during a press briefing.
Capacity Constraints and Strategic Choices
Banerjee explained that the push to deliver more small cars comes with a trade-off. Due to limited overall production capacity, the company has to sacrifice the output of some other models, particularly in the compact vehicle segment.
"If we are producing more small cars, we have to sacrifice some other models. So, in order to serve our customers on a turn-by-turn basis, we are trying to produce the models, and we are delivering them to customers," Banerjee said. Maruti Suzuki has an annual production capacity of 2.6 million passenger vehicles across its plants in Gurugram, Manesar, Hansalpur, and Kharghoda.
The company, which had offered steep discounts since September alongside the GST cuts, is now evaluating whether to continue with such aggressive pricing as demand picks up. "We will soon make a decision," Banerjee told reporters.
A Segment Fighting for Revival
The mini car segment has been under intense scrutiny. Demand had been declining steadily for years as Indian consumers increasingly shifted preference towards Sports Utility Vehicles (SUVs). Since 2019, SUVs have grown from representing one in five cars on Indian roads to one in two.
Data from the Society of Indian Automobile Manufacturers (SIAM) for October-November showed mini cars grew just 3% year-on-year to 22,415 units. In stark contrast, compact SUVs (under four meters) grew 17% to 207,180 units in the same period.
For the April-December period, Maruti recorded a 15% decline in mini car sales to 76,044 units, even as other segments grew. Despite this, the management remains optimistic. Banerjee pointed to a strong order backlog: "We have pending bookings of more than 1.5 months, despite seeing growth in sales. This month, sales doubled, yet the backlog for mini segment vehicles remains around 1.5 months."
The segment's future is also tied to a broader industry debate. Carmakers are discussing whether vehicles weighing less than 909 kg should receive special relief under upcoming emission norms. All mini cars fall below this threshold. While rivals like Tata Motors and Mahindra oppose weight-based relief, Maruti argues that small cars deserve an exemption to remain viable.
Analysts See a Phased Recovery
Market experts suggest the revival of the mini car segment will be gradual. Puneet Gupta, Director at S&P Global Mobility, explained that growth post-GST cuts will unfold in phases. The current momentum is driven by existing market buyers who are now upgrading to sub-compact and compact SUVs.
"From April-May 2026, however, entry-level and mini cars could witness a revival, provided consumers see meaningful prices associated with the segment," Gupta said. He added that the comeback will hinge on the commitment of manufacturers like Maruti Suzuki to reignite demand, playing a decisive role in the market's shift.
