The contrast with the year’s first half is stark. Between April and September 2025, Maruti’s total domestic sales, including light commercial vehicles, stood at just under 10 lakh units, a modest 1.4 per cent increase over the previous year. Exports had been the bright spot, rising almost 40 per cent. October, however, broke that rhythm: a surge in compact-car demand lifted volumes well beyond internal forecasts.

The more telling data point lies within Maruti’s model mix. Mini and compact cars accounted for 85,210 units, while utility vehicles contributed 77,571 units. For the first time in several quarters, small cars outperformed SUVs inside the Maruti portfolio, a reversal that many within the company quietly view as the validation of a long-held belief.

The SUV decade, and one man’s conviction

For much of the past decade, India’s auto story has been an SUV story. Sport-utility vehicles climbed from less than 25 per cent of passenger-vehicle sales in FY18 to over half by FY25, as customers traded up for ground clearance, space, and status. Every manufacturer scrambled to fill that space, Maruti included.

The Brezza, Grand Vitara, Fronx, Invicto, Jimny, and, most recently, Victoris, helped the company reclaim market share it had lost to Hyundai, Kia, and Tata. In October 2025 alone, SUV volumes rose about 10 per cent year-on-year.

Yet, through this SUV dominance, Chairman RC Bhargava remained the industry’s lone contrarian. In multiple press briefings, he insisted that India’s small-car slump was never about aspiration; it was about affordability. “People didn’t stop wanting small cars,” he said, “they simply stopped being able to afford them.”

When the country’s smallest vehicles became heavily taxed under the uniform GST regime, Bhargava argued that India’s mobility pyramid was being inverted, and aspiration was outpacing income. He predicted that once affordability returned, the market would rebalance within two to three years. That prediction now looks uncannily accurate.

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

Policy tailwinds change the equation

The turning point came on August 15, 2025, when the government revised GST slabs, lowering the rate on small cars. The move immediately altered buying behaviour. Models under four meters and 1,200 cc suddenly became several percentage points cheaper, pulling thousands of potential buyers back into the market.

Maruti’s data show that in October, small-car growth outpaced SUVs in both percentage and absolute terms. Compact-segment models, Swift, Baleno, Dzire, Wagon R, Ignis, Celerio, rose from 65,948 units a year earlier to 76,143, while entry-level models such as the Alto and S-Presso held steady despite a smaller sub-segment base.

Bhargava called the policy a “bold and timely step” that restored confidence among the middle class. “Those who had stayed away from the market are returning,” he said, “people now feel that the government has genuinely acted to make personal transport affordable again.”

The anatomy of a revival

The October numbers make one thing clear: small cars are back in contention. What once looked like a structural decline is beginning to resemble a cyclical revival, shaped by a confluence of factors that Maruti has long argued were waiting to fall into place. The biggest catalyst has been affordability. The GST revision reset price expectations almost overnight, pulling back into showrooms those customers who had been priced out for over a year. Dealers say buyers who had indefinitely postponed purchases returned the moment on-road prices dropped.

Equally important is the return of the first-time buyer, the two-wheeler owner looking for a safer, more comfortable upgrade. It’s a familiar picture from Maruti’s formative years: helmets resting on showroom tables as customers sign booking forms, a quiet symbol of upward mobility and renewed confidence. That revival is being amplified by Maruti’s deep reach across rural and semi-urban India. With more than 3,700 outlets, the company’s Tier-2 and Tier-3 markets are now outpacing metros in demand growth, proving once again what Chairman RC Bhargava has often said that India’s real car market lies beyond its big cities.

Timing, too, has worked in Maruti’s favour. The GST cut landed just ahead of the festive quarter, magnifying its effect as sentiment and savings aligned. Dealer stocks moved faster, and waiting periods for small cars returned for the first time since 2019. Together, these forces have given the small-car segment a renewed sense of momentum, a reminder that even in a market infatuated with SUVs, the humble hatchback still has the power to surprise.

Caution amid celebration

Bhargava, however, is not ready to declare victory. “Only one month has passed,” he said. “To know how deep this demand runs, we’ll need at least two quarters.” His view is pragmatic: the second half of FY26 will likely outpace the first, but sustainability will depend on financing conditions and cost stability. Nevertheless, he concedes that double-digit growth in the small-car category is plausible for “some time to come.”

For India’s largest carmaker, even a few percentage points of renewed small-car momentum translates into tens of thousands of incremental units, a scale advantage that few competitors can match.

Also Read : Maruti Suzuki steadys growth path with GST relief, Victoris and safety push

The rebalancing act

The implications stretch beyond Maruti. After years of chasing high-margin SUVs, the industry may be forced to reconsider its product mix. Bhargava believes the market is correcting itself. “Many carmakers will realize what the Indian market truly is,” he said. “Some will have to revise their strategy.”

Maruti, which already dominates the lower-tax bracket with about 70 per cent market share in that band, stands to gain the most from any rebalancing. Its plants are now equipped for greater flexibility, allowing faster shifts between hatchbacks and SUVs depending on demand.

This agility, combined with the volume base of its small cars, could help the company defend its 43 per cent overall market share even as competition intensifies in the premium space.

Mission beyond margins

Behind the numbers lies a philosophy that Bhargava often repeats: Maruti exists not just to maximize profit but to expand access. “Our objective is to serve India and its people,” he said recently. “If we must make smaller cars with lower margins, we will still do that.”

It is a line that could have come straight from the company’s founding charter four decades ago. Bhargava’s conviction is that broadening car ownership creates its own economic multiplier, jobs in the supply chain, scale for component makers, and tax revenue from higher overall volumes.

He also frames it as a social imperative: two-wheeler riders account for a disproportionate share of road fatalities. Enabling their transition to four wheels, he argues, is a matter of safety as much as aspiration. That is why Maruti’s small-car revival is more than a balance-sheet event. It represents a reaffirmation of purpose, the same purpose that once transformed India’s mobility landscape.

Looking ahead

With export volumes on track to cross 4 lakh units this fiscal and the first line at Kharkhoda running at full tilt, Maruti enters 2026 with confidence and capacity. A second line at the Haryana plant is scheduled for commissioning early next year, potentially taking total capacity near the 3-million-unit mark.

But Bhargava remains clear-eyed about the broader picture. The GST reform, he believes, will benefit not just Maruti but the entire ecosystem, boosting production, employment, and consumer welfare. “Lowering tax rates,” he said, “does substantial good for production, employment, and convenience.”

October’s numbers seem to back him up. In a market where SUVs were expected to dominate indefinitely, it was the small car that quietly stole the spotlight, outselling utility vehicles and re-establishing its claim as India’s true mobility workhorse.

For Maruti Suzuki, and for Chairman Bhargava, the small car was never yesterday’s story. It was merely waiting for the right chapter to begin again.

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.

First Published Date: 01 Nov 2025, 21:09 pm IST