Maruti Suzuki sees compact car uptick in July amid structural stress in entry segment

Hindustan Times

3 days ago

In a surprising turn of events, Maruti Suzuki , the leading carmaker in India, after a very long period has reported an uptick growth for its compact car segment. The carmaker has long been advocating the resurgence in the small car segment for the growth of the Indian passenger vehicle market.
Maruti Suzuki saw a 5.6 per cent rise in compact car sales in July 2025, led by Dzire and WagonR, even as entry-level and SUV segments showed weakness. With exports growing and festive demand ahead, the company remains cautious in its FY26 outlook.
In the month of July 2025, Maruti Suzuki reported total retail sales of 72,489 units for its compact car segment as compared to 68,642 units it retailed for the same month last year, marking a growth of 5.6 per cent. In contrast, the utility vehicle segment saw a decline of 6.2 per cent in the same month—from 56,302 units in July 2024 to 52,773 units in July 2025. In fact, out of the top three cars sold by Maruti Suzuki in July, two were from the compact car segment—the Dzire with 20,895 units topped the charts, while the WagonR, with 14,700 units, secured third spot.
Partho Banerjee, Senior Executive Officer, Marketing and Sales, attributed part of the compact segment's resilience to the renewed demand for the WagonR, which he said is 'back on track." According to him, bookings for the model have picked up, reaffirming its status as a trusted city commuter. However, not everything is as buoyant in the small car universe.
The entry-level conundrum
The mini car segment, once the backbone of India's motorisation journey, continues to show signs of stress. Maruti's Alto K10 and S-Presso, once the poster children of affordable mobility, recorded combined sales of just 6,822 units in July—a sharp 31.5 per cent decline year-on-year.
The reason is not difficult to decipher. Despite its past history of affordability, this segment has been hit hard by disproportionate exposure to price inflation, regulatory expenses (safety mandates), and lack of wage growth in its fundamental rural and small-town consumer base.
Also Read : Maruti calls for small car revival to drive auto growth, banks on exports for near-term gains
Financing, particularly to first-time buyers, still remains an impediment, added to by tighter norms post-pandemic and NBFC risk aversion. As Banerjee has pointed out, there is demand on paper—enquiries and visits are intact—but the conversion is low-key because of the initial cost burden. 'The entry segment needs structural support, possibly in the form of GST rationalisation," he reiterated. Until then, this segment may continue to wobble, despite its strategic importance to market expansion.
Resilience in compact car segment
The compact car segment, on the other hand, appears to be benefiting from a more balanced equation. Products like the Dzire and WagonR offer a blend of affordability and features, especially with CNG variants and automated manual transmissions (AGS) that appeal to cost- and comfort-conscious buyers alike. In fact, CNG models constituted about 40 per cent of the total domestic sales for the company in July 2025 and 37.5 per cent in the first quarter of financial year 2025-26.
Interestingly, limited edition variants launched in the past quarter helped infuse freshness into long-standing models. 'When the market is muted, it's important for the leader to spark excitement," said Banerjee. These variants, paired with pre-festive schemes, have helped the Dzire and WagonR maintain relevance even in a market weighed down by cautious sentiment.
Also read: Maruti Suzuki Alto K10, Celerio, S-Presso Dream Edition launched at ₹4.99 Lakh
Bookings for these models are robust, but as Banerjee noted, there's still an intervening gap between reservations and sales — all because of reluctance among metro consumers and ongoing credit woes among first-time buyers.
The SUV plateau and the Eeco dip
The decline in UV sales is not necessarily a condemnation of demand but more an instance of temporary market fatigue and internal readjustment. While models like Brezza and Fronx continue to do well, Banerjee acknowledged that the SUV market may have reached a short-term plateau.
'There were over ten SUV launches last year alone, and now the base is expanding. Growth will continue, but it's more about resizing than runaway demand," he said.
The Eeco, once a reliable volume generator for Maruti, is also showing signs of strain. A 6 per cent price hike following the inclusion of six airbags has created financing hurdles for buyers. 'The interest is there, but conversions are delayed. We're working with NBFCs to bridge that gap," Banerjee noted.
Eyes on the festive quarter
Looking ahead, Maruti expects the compact segment to continue offering steady momentum, particularly during the festive season. With Onam in Kerala marking the start of the festive calendar, Maruti Suzuki is cautiously optimistic. Bookings in Kerala have already grown by 10 per cent year-on-year, and the company expects this momentum to carry into Ganesh Chaturthi and Navratri.
While the company isn't pushing dispatches merely to boost wholesales, it is preparing to ramp up production of high-demand CNG variants and limited editions to match anticipated demand. 'We're calibrating stock carefully — volume will follow, but we're not chasing it blindly," said Banerjee.
But the outlook is not without caveats. 'Entry-level remains under stress," admitted Banerjee. 'And while there's optimism, we need to watch financing behaviour closely." Maruti is also working with NBFCs to bridge financing gaps in smaller towns, but the impact may take time to reflect in wholesale figures.
Exports: The silent buffer
With domestic demand showing visible fatigue, Maruti is turning increasingly to exports for growth. The company has set an ambitious target of 400,000 export units in FY26, up from 283,000 units in FY25. What's more telling is that the company now accounts for 43 per cent of India's passenger vehicle exports, with plans to push that share closer to 50 per cent.
Also Read : Maruti Suzuki India eyes 4 lakh exports in FY26 to counter domestic market slowdown
Africa, Latin America, and ASEAN continue to be focus geographies, but a surprising bright spot has been Japan—Maruti's second-largest export market, thanks largely to the Jimny and Fronx. These models, engineered in India, are finding takers even in quality-conscious mature markets. As Partho Banerjee had earlier remarked, 'Exports are helping us balance out domestic fluctuations. In a way, they've become our second growth engine."
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