Car buying restricted to 12% households in India: Maruti's R C Bhargava

Car purchases in India are largely limited to the top 12 per cent of households with an annual income exceeding Rs 12 lakh, while even small cars have become unaffordable for the remaining 88 per cent, Maruti Suzuki India (MSIL) chairman R C Bhargava said on Friday.

Overall passenger vehicle (PV) sales growth in India stood at 4.3 million units in 2024-25, which was just 2 per cent higher year-on-year, according to Society of Indian Automobile Manufacturers (SIAM) data.

Bhargava expressed doubts on whether the major income tax relief given by the Union government in the last Budget is going to boost small car sales in 2025-26.

 Bhargava said it is a fallacy to think that the decline in the small car market and the growth of the sport utility vehicle (SUV) market is a result of people’s aspirations changing and people wanting to buy big cars instead of small cars.

 He said lower taxes and different regulations are needed to boost the small car segment in India, just like the ones present in Japan for “kei” cars. In Japan, kei cars small, lightweight vehicles with engine capacities of up to 660cc enjoy significant tax and regulatory advantages.

He said that the domestic market growth will — unless something changes — remain muted in 2025-26.