Is it end of the road for small cars in India?

With Maruti Suzuki India saying that it may be forced to discontinue making small cars if costs become unviable because of the Central government’s policies, it could signal the end of an epical segment.

. It could also mean MSIL will lose out on market share in the overall Indian car market, which has already shrunk to 42 per cent from 50 per cent a few years ago.

The company’sChairman RC Bhargava said on Monday the company may stop making small cars if the government makes it mandatory to have six air bags from October 1..

Bhargava said the company anyway does not make much profits from the sale of small cars.

Small car sales decline

Trend also shows that MSIL’s mini or small cars like the Alto and S-Presso have seen their sales decline in the last five years. In 2017-18, the total sales of mini segment (Alto, WagonR previous generation) which used to be 4,27,183 units, declined by more than 50 per cent to 2,11,762 units (Alto, S-Presso in 2021-22.

According to analysts, small cars market is likely to exist only till 2027 as buyers shift to bigger, more comfortable and tech-laden cars, a combination which one can see in the compact or premium hatchback or the compact sports utility vehicles (SUVs), which are selling like hot cakes.

“For Indians, it was a sub-compact car, but they say anything below ₹10 lakh doesn’t make sense now... ...in internal combustion engine (ICE), we won’t see more small cars now. We may see some small cars in the electric segment because bigger size is not profitable yet,” Puneet Gupta, Director at IHS Markit, told BusinessLine.

On MSIL’s market share, he agreed that not only will the industry size shrink, but overall market share of the company may also decline by five per cent.

Meanwhile, MSIL will not be the first company to stop making cars which are not viable or profitable in the market. The second largest car maker Hyundai Motor India has already stopped making Eon a few years ago and the new Santro recently.

Customer preference

According to Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India, customers are looking for more and more from their cars today – both in terms of features and options, even the first time buyers.

First time buyers no more want to buy a hatchback, which is clearly evident from numbers. From around 20 per cent first time buyers for the compact SUV three years ago, now it has become 36 per cent, Garg said.

While Honda Cars India discontinued the Brio, Datsun with RediGo and General Motors’ with Chevrolet Beat, Volkswagen India has stopped the Polo hatchback.

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