Maruti Suzuki gears up to launch new Swift, says there is no reason to believe why small cars will not revive

New Delhi: Placing its bet on the revival of the small car segment while launching new SUVs to get back its share in the market, country’s largest carmaker Maruti Suzuki India Limited (MSIL) is prepping up to launch the new-gen model of its popular Swift premium hatchback on May 9.

Swift, since its introduction in 2005, has garnered sales of 29 lakh units. Bookings for the upcoming model are open at a token amount of INR 11,000.

“Hatchback is one of the very important segments for us. There is no reason to believe why this small car segment is not going to revive. It is only a matter of time,” said Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki.

“Owing to regulatory changes, there has been a steep price increase for the small cars, while the income of the consumers has not increased to that extent. So there is an affordability gap. We expect that by 2026-end or 2027, we will again see a growth in the hatchback segment and this market will revive,” he told reporters during a virtual call on Wednesday.

India has always been known as a small car market, where the likes of Alto and Santro accounted for one out of every two cars sold in the country. However, the demand for SUV-style vehicles has gone up tremendously during the past 3-4 years. The popularity of bigger and bolder vehicles has clearly taken up the pie. Most companies are cashing in on this trend. As a result, the share of the small car market which was about 47% of the total passenger vehicle (PV) sales in the industry during FY18 has dropped to about 28% in FY24.

Share of hatchback, sedan, SUV in total PV sales of the industry

Maruti Suzuki, which has been a leader in the small car segment, sells models like the Alto, S-Presso, Celerio, Ignis, Wagon-R and the Swift. Over the years, the company has lost its share in the PV market, dropping down from 51% in FY20 to 42% in FY24. In an attempt to regain a portion of the lost share in the market, the company introduced new models like Grand Vitara, Fronx and Jimny during the past few years. Now, 28.5% of Maruti's total PV sales come from SUVs.

Meanwhile, the two-wheeler segment which has been struggling since FY 2019-20 is seeing the demand coming back gradually this year. Taking a cue from this segment, Banerjee said that even in the past, whenever there is a revival in the two-wheeler industry it is followed by a revival in the four wheeler industry, but with a lag. “It is only a matter of time for the small car segment to revive once the affordability part improves,” he reiterated.

According to him, India has the potential since the car penetration in the country per 1,000 people is only 32. However, in all the mature markets, like Japan, the car penetration per 1,000 is 600. “We are moving in that direction. It is expected that by 2030, we will be having 44 cars per 1000 people.”

He stated that there is going to be a customer profile for each type of vehicle, so going forward there will be a market for all the segments including small cars, premium hatchbacks, and all categories of SUVs as well.

In April this year, the industry recorded a minor growth of 2% in domestic passenger vehicle sales at 3.38 lakh units, up from 3.32 lakh in April 2023.

“We have started this year on a high base. There is more stock in the network now, compared to last year when supplies were disrupted due to the semiconductor crisis. There is also some uncertainty due to the ongoing elections. Once the new government is formed, and policies are announced, there will be more certainty in the market," said the Maruti Suzuki official.

He noted that overall the car sales are expected to grow in single-digits in FY25.

Maruti Suzuki domestic sales in April

During April, Maruti Suzuki witnessed a year-on-year decline across the passenger car segment including hatchbacks and sedans, while sales of utility vehicles increased 54%.