Maruti Suzuki Flags Weak India Demand, Highlights Pressure On Small Car Sales

Maruti Suzuki India Ltd. on Monday highlighted weakening domestic demand, especially in the small car segment, as stricter regulations have pushed prices up. The company's executives said automobile despatches in May remained broadly flat and would have declined if not for new launches.

In a virtual press meet, the company said it sold 180,077 units last month, up 3% on year, mainly due to an 80% jump in exports. Passenger vehicle despatches in India, however, fell 6%.

The company cited multiple reasons for the drop, including the recent India-Pakistan skirmish that impacted sales in tourism-heavy regions like Punjab and Jammu & Kashmir. It also calibrated supply to dealerships to avoid overstocking. Maruti Suzuki said its dealer inventory stands at 35 days nationally.

Despite subdued demand, the top three selling models in India in May were from Maruti Suzuki. The company did not name them but said they included a multipurpose vehicle, an SUV, and a sedan.

The automaker added that its export strategy has helped de-risk the business. Models such as the Fronx, Baleno, Dzire, and Jimny are now being sold overseas, including in Japan.

Affordability drag on small cars

Maruti Suzuki reiterated that growth in the overall market hinges on the revival of small car sales, which remain under pressure due to rising costs linked to regulatory mandates. While enquiries remain strong, the company said that many buyers are unable to secure financing.

“Conversions are a problem… many of these customers are not able to get the finance done,” a company executive said.

The company called for government support to boost small car sales and help two-wheeler owners upgrade to safer four-wheelers.
Maruti Suzuki now offers six airbags in nearly 97% of its models. “We’re trying to educate customers on the value of safety. But affordability cannot be only the OEM’s responsibility,” the company said.

Maruti sells around half its cars in rural India and expects a good monsoon to aid sentiment there. In contrast, urban demand remains weak, especially for entry-level models. Even within the utility vehicle segment, older models are seeing falling sales.

China Rare Earth Curbs Pose EV Risk

Maruti Suzuki confirmed it is in talks with the Indian government over China’s new export norms for rare earth magnets, key components in electric vehicles. China now requires an end-user certificate approved by both Indian and Chinese authorities before shipment can proceed.