Expect revival in small cars segment in 2 years: RC Bhargava

RC Bhargava, Chairman of Maruti Suzuki India, had earlier stressed the importance of revitalising the entry-level vehicle segment for sustainable growth within the Indian auto industry. In a recent press conference, while expressing optimism regarding its potential, Bhargava tempered expectations, suggesting that a swift recovery in the current fiscal year might be overly optimistic.

During the press conference, Bhargava observed a positive trend in the revival of the two-wheeler segment. He noted the significant progress made by the segment compared to two years ago, indicating that the small car market's resurgence would likely follow suit. However, he cautioned that this process would take time, estimating at least two years for the entry-level segment to experience genuine growth.

Bhargava explained that the entry-level segment's rejuvenation hinges on attracting customers from the two-wheeler domain or those entering the market for the first time. He emphasised the critical role of affordable offerings in stimulating demand, especially among these customer demographics.

In light of these factors, Bhargava suggested that a two-year timeframe is a realistic minimum for the small car market to anticipate a resurgence in customer interest. This timeline allows for the completion of the two-wheeler segment's recovery and accounts for the natural increase in demand that typically follows changes such as the introduction of BS-VI regulations and subsequent price adjustments.

Banking on increasing production capacity for growth

While according to the Chairman of Maruti Suzuki, growth in the entry-level segment isn't anticipated until 2025, he highlighted that UVs (Utility Vehicles) will continue to dominate the car market for the foreseeable future. In FY 2022-23, Maruti sold 3,66,129 UVs, including models like the Brezza and Ertiga. Surging ahead, in FY 2023-24, the company witnessed an impressive 75.4 percent increase in UV sales, reaching 6,42,296 units.

Despite this remarkable growth, the company remains unsatisfied, acknowledging that more work is needed to achieve their targets in the SUV segment. Maruti aims to capture at least 25 per cent of the SUV market, which would propel them towards their previous high of holding 50 per cent of the entire Indian passenger vehicle industry.

While the Chairman didn't divulge specifics about upcoming SUV lineups, he revealed plans for expanding production capacity to realise their ambitious market share goals. Maruti is actively bolstering its presence in the larger car segment, with plans to increase production capacity. Expansion efforts include adding 100,000 units at the Manesar facility and initiating production at the Kharkhoda slated for completion by FY 25-26. Additionally, by the end of 2026, Maruti expects to gain more capacity from the Gujarat plant (SMG), with the fourth unit set to commence operations.

This augmented capacity is integral to achieving their targets, as increased production allows for higher volumes to meet market demands. However, the Chairman cautioned that if market growth outpaces the company's capacity additions, Maruti may struggle to keep pace.

He emphasised that market capacity alone isn't the sole determinant of a company's success; rather, it's the ability to add and effectively utilise capacity while meeting sales targets. Despite facing competition and production constraints, Maruti has made significant strides, increasing its market share from 40 per cent to 42 per cent in just two years, the chairman explained.