Maruti bets small cars will gain from SUV ride

Co urges dealers to stock up more hatchbacks, rationalizes production

- Alisha Sachdev

Maruti Suzuki India Ltd, which dominates India’s small car segment, is urging dealers to stock up on hatchbacks, as the country’s largest carmaker anticipates a positive impact from its expanding sport utility vehicles (SUVs) portfolio.

The move comes amid muted demand for hatchbacks, which has led to ballooning inventory and tied-up working capital at small car dealerships, two people aware of the matter said on condition of anonymity. Simultaneously, it has also started streamlining production of small cars, as supply chain challenges, which had hindered production of its feature-rich SUVs, are gradually easing, they added.

However, following a lean period of two-and-a-half years with minimal inventories, with semiconductor shortages restricting supplies, auto dealers are now faced with yet another challenge, having to cope with up to 60 days of stocks at showrooms.