- Small and affordable cars once formed the backbone of the Indian auto industry but lost market share to the rise of SUVs.
Small cars are likely to make a turnaround in terms of sales in India next year despite the constant rise of popularity of SUVs. Normura, one of the renowned global financial services firm, has predicted that small and affordable cars are expected to bounce back in 2025. Nomura’s estimates are in line with what Maruti had claimed about the future of small and affordable cars in India. The segment currently has a share of around 28 per cent while the SUV segment has grown beyond 50 per cent.
Nomura has shared a report with estimates for the Indian auto industry for the third quarter and an overall estimate on what the next year is expected to be like for the passenger vehicle segment. The firm said that India’s overall car sales is likely to grow at a much more nominal rate in the ongoing quarter of the financial year. The segment is likely to witness about one per cent year-on-year between October and December, down from four per cent earlier.
About small and affordable car sales in India, the report by Nomura hints at a revival phase for the segment with likely momentum. The report said, “As pent-up demand fades away, a tepid new launch pipeline and subdued small car demand have impacted near-term momentum. This is despite the discount push and ad spends by OEMs. We expect a gradual improvement in FY26/3E on a low base.” The report also said that the CNG vehicle segment is likely to see continuous growth while the electric vehicle segment will witness deeper penetration with a slew of new launches lined up from January next year including the likes of Mahindra XEV 9e, BE 6e, Maruti Suzuki e Vitara, Hyundai Creta EV among others.
Also Read : Maruti Suzuki joins Hyundai Motor, to hike car prices from January 2025
Small car segment to revive soon: Maruti Suzuki
Earlier, Maruti Suzuki had said that the small car segment is likely to bounce back by 2026. RC Bhargava, Chairman at Maruti Suzuki India, had recently said that entry-level vehicle prices have gone up at a faster rate than income level of buyers in India. He said, “Maybe by 2026, the impact of these high prices will be absorbed by the increase in the purchasing power of people in that category. The slide will get arrested.”
The sentiment was echoed by Partho Banerjee who also said the SUV trend is likely to get arrested soon as the carmaker witnessed small uptick in small car sales in October, especially in the rural sector. “We saw good traction in October with a growth of almost 10%,” said Banerjee.
Small car sales in India
From the 1990s, small cars led by Maruti Suzuki and Hyundai Motor were the backbone of the Indian auto industry. The segment’s share in overall sales was more than 47 per cent in Financial Year (FY) of 2017-18. It has gone down to around 27 per cent in the last FY when India bought 12 lakh small cars out of around 40 lakh cars sold in a year. Maruti Suzuki still dominates the segment with 68 per cent market share by selling more than eight lakh small cars and hatchbacks. Maruti’s small and affordable cars like Baleno, Swift and WagonR continues to be among some of the most popular cars preferred by Indian buyers as they lead the sales charts.
Check out Upcoming Cars in India 2024, Best SUVs in India.
First Published Date: 06 Dec 2024, 12:38 PM IST
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