May take 2 to 3 years for small car market to revive: Maruti Suzuki Chairman

Maruti Suzuki on Friday announced strong Q2 profits that touched new highs on the back of strong demand for its SUVs as well as cooling input costs. Crediting its new lineup of models like Brezza, Grand Vitara, Fronx and Jimny, Maruti Suzuki's profit after tax for the three months uptil September 30 increased by 80 per cent to ₹37.17 billion. But for a manufacturer long known for its extremely tight grip on the small-car market, the company added that it does not expect the small car segment to revive any time soon.

While demand for - and sales of - SUV body types have zoomed in recent times, small cars have seen a reduced traction. Part of the reason for this could be rising purchase costs which particularly affects first-time buyers. Other factor could also be the rising number of options in the sub segments within the SUV body type. So while Maruti SUVs like Brezza and Fronx have added wind to the company's sails, demand for power sellers like Alto K10 and S-Presso has fallen.

At a press meet on the sidelines of its Q2 financial results' announcement, Maruti Suzuki Chairman RC Bhargava explained that he does not see the small-car segment staging a turnaround anytime soon. “In my estimate, it will take around two or three years for any revival for small cars," he said. “Unless the government cuts taxes, which I don't see happening, or unless income levels rise faster than increasing cost of cars, the revival will take time."

Underlining that small car buyers may be more sensitive to rising purchase costs, Bhargava said Maruti Suzuki is still in a position to manufacture entry-level vehicles in large numbers. “But the customer demand has to come back. We did not reduce production for such vehicles because we wanted to. We did because of changing customer demand patterns," he said, adding that favourable governmental policies at present will ensure that purchasing powers rise.