The growing preference for SUV body type among mass-market Indian car buyers has come at the behest of smaller car models and while this has impacted different brands differently, Maruti Suzuki may have been left with more concerns than reasons to cheer.

Maruti Suzuki has always had a robust small and hatchback lineup with the likes of Alto K10, WagonR, Baleno and Swift faring far better than competing models, respectively. But recent years have seen demand in the small-car segment decline while SUVs have gained in popularity. What has it meant for the country's largest carmaker.

In recent times, Maruti Suzuki has made a determined bid to expand its SUV portfolio, launching the likes of Fronx, Jimny, Grand Vitara and even the Innova-based Invicto. But while a few of these models have fared well, the decline in sales of models in the mini and compact sub-segments is a worry especially because overall demand in the domestic Indian automobile market has fallen this year vis-a-vis last year.

Who is (not) buying what?

At a press conference announcing its financial results for Q2 of 2024, Maruti Suzuki Chairman RC Bhargava was asked if the slowdown in the Indian car market is a worry. “I am not worried. I would worry if the market remained steady. Of small cars and big woes: Maruti Suzuki says under ₹10-lakh segment a worry," he said. “We have shown in the past that we are resilient. We can manage good times as well as bad times."

But Bhargava did admit that the farings of small car models in the market does worry him. “The slowing down of the lower-end of the market is a worry. The under ₹10-lakh car segment was 80 per cent of the total market at one point but that segment is not growing now," he explained, adding that affordability is a factor for this. “People need to have more disposable income."

Maruti Suzuki reported its second-quarter revenue figures on Tuesday and it was lower than what was expected. Standalone revenue from operations increased by 0.4 per cent to 372.03 billion rupees in the July-September quarter but as per Reuters and data compiled by LSEG, it was expected to increase by 1.4 per cent to 375.59 billion rupees.

What has also impacted Maruti Suzuki is that its profit dropped for the first time in three years, largely due to a deferred tax liability of 8.38 billion rupee. Excluding this though, profits were up on a year-on-year basis.

In the quarter, Maruti Suzuki sold a total of 1,063,418 units of which 915,142 units were in the domestic market. Sales in the domestic market were down 0.3 per cent even though exports were up by 11.9 per cent year-on-year.

Company officials, however, have highlighted that Maruti Suzuki has seen a lot of inquiries this festive season - starting from end of shraadh till the end of Diwali. It is also specifically pointed out that inventories at dealership level is currently at a rather healthy 30 days.

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