SMALL CARS, BIGLOSSES

Rising costs from stricter safety and emission rules, coupled with a shift toward SUVs, have battered small car sales. Carmakers are urging tax relief to revive the segment

- By M.G. ARUN

THE SMALL CAR, ONCE A SYMBOL OF MIDDLE-CLASS MOBILITY and mass aspiration, is fast disappearing from Indian roads. Entry-level cars priced below Rs 5 lakh, which sold around a million units in FY16, declined to just 25,402 units in FY25. The share of hatchbacks in total car sales has halved, from 47 per cent in 2020 to 24 per cent in 2024. Hatchback sales of India's largest carmaker, Maruti Suzuki, fell from 771,478 units in 2020 to 730,766 units in 2024. The plunge has continued in 2025, with sales in the company's mini segment (Alto and S-Presso) registering a 31.5 per cent year-on-year drop in May, falling to 6,776 units from 9,902 units last year. Hatchback sales at the second-largest small carmaker, Hyundai Motor India, also fell—from 192,080 units in 2020 to 124,082 in 2024.

This has alarmed automakers. “So somewhere the government has to understand that if they want to fuel the growth of the auto industry, they need to understand where the problem is and how to increase the size of the pie (small car sales),” Partho Banerjee, senior executive officer (marketing & sales), Maruti Suzuki, said at a media interaction on June 2. “Some incentives are required, so that the customer who is not able to afford a car can come in and migrate to a four-wheeler from a two-wheeler.” Hatchback sales comprised 40 per cent of Maruti Suzuki's total car sales in 2024. R.C. Bhargava, the company's chairman, told INDIA TODAY that small car sales were upbeat until 2018. “But now a large segment of the car market isn’t growing. Overall growth of the auto sector happens only when all segments grow.” What worries him is that small car sales will keep declining if nothing is done to address the issue, and that this will eventually hit carmakers hard.

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