Small cars to remain a significant part of Indian market, says Maruti Suzuki

With the Indian economy on a revival model and poised to grow among the fastest globally, income levels are expected to rise, supporting first-time buyers in the mass market, and spurring sales of small cars going ahead, Shashank Srivastava, senior executive director (marketing and sales) at

, told ET on Thursday.

“There is inherent demand (for small cars) given our demographics. The median age of our country is 25 years. As much as 65% of car buyers are aged less than 35 years. A lot of young people are coming into the workforce every year and they aspire for personal mobility,” he said on the sidelines of the launch of new Alto K10 priced between Rs 3.99-5.83 lakh (ex-showroom).

First-time buyers account for half the sales of passenger vehicles in the local market.

Srivastava said sales at the entry-level have been under pressure in recent times due to an increase in cost of vehicles on the back of an increase in taxes, commodity prices, and enhanced regulatory requirements, besides consumer preference for additional features.

“The price increase as a percentage of overall vehicle cost in this segment has been higher,” he said. “And because of a high sensitivity to price, growth in this segment has not been much. But demand exists. It is up to the manufacturer to strike a fine balance, offer value and fructify demand.”

As many as 550,000 entry-level hatchbacks were sold in the country last year. Maruti Suzuki dominates this space with market share of 88%. “The absolute volumes in the segment are large even when compared with SUVs. The top four best-selling models continue to remain hatchbacks,” Srivastava said.

SUVs were the highest-selling segment in the Indian car market last financial year with sales of 1.23 million units compared to sales of 1.15 million hatchbacks.

Srivastava admitted that Alto – once the largest selling car in the Indian market – has slid down the ranks to the fourth slot the past few years, but said with the newly launch Alto K10, it is expected to regain the pole position.

As much as 65% of Alto sales come from smaller cities. With the new Alto K10, Maruti Suzuki aims to increase the sales from bigger cities as well.

To be sure, Alto with sales of 150,000 units last year was ahead of SUVs like Hyundai Creta, Maruti Suzuki Brezza and Tata Nexon in terms of volumes.

“India is a vast country with a diverse demography,” Maruti Suzuki managing director Hisashi Takeuchi said. “Just like cuisine and culture, customer requirements and preferences also change from place to place… While SUVs have definitely gained popularity in recent times, a large section of customers still prefer hatchbacks… As a market leader, we need to keep the hatchback segment energised with exciting products,” he added.