Maruti Suzuki India Limited (MSIL) has reported its highest-ever annual sales and profits for the financial year 2024–25, driven not by the strength of the domestic market, but by a significant surge in exports. The company sold 2.23 million vehicles in FY25, of which 3.3 lakh units were exported, marking a 17.5% growth in overseas shipments. This contrasts starkly with the domestic market, where sales grew a mere 2.7%. Chairman R C Bhargava made it clear that without structural corrections, particularly in the small car segment, the growth trajectory for India’s largest OEM may become unsustainable.
The subdued mood over domestic demand was reflected in Bhargava’s candid remarks during the post-results interaction. He flagged a 9% decline in small car sales, blaming rising regulatory costs that have made entry-level vehicles unaffordable for most Indian households. According to him, only about 12% of Indian households can currently afford cars priced above INR 10 lakh, thereby shrinking the potential customer base for most mass-market products.
Export Strategy Becomes Central
The management underlined that FY26 would likely mirror FY25, flat domestic growth, but a targeted 20% increase in exports. The company currently commands around 43% of India’s total passenger vehicle exports. The key to sustaining this momentum lies in diversifying export destinations and aggressively pushing models like the Jimny 5-door and Fronx in markets such as Japan, South Africa, and Chile.
Japan too has emerged as one of the top five destinations for Maruti’s exports for the first time, an achievement attributed to the success of India-made products in Suzuki’s home market. However, Bhargava tempered enthusiasm by warning that global economic uncertainties, including Trump’s tariff-related tensions, may still cast a shadow over international demand.
Domestic Market
Maruti’s leadership repeatedly stressed that regulatory costs have disproportionately hurt smaller cars, which form the mobility backbone for low-income households. Bhargava lamented that rising vehicle prices, nearly INR 90,000 higher per unit due to added safety and emission mandates, have pushed many potential first-time buyers out of the market.
He reiterated the urgent need for a policy rethink, citing Japan’s ‘k-car’ model, where light cars benefit from tax relief and regulatory leniency, enabling mass adoption. “Unless we find an entry-level vehicle option below INR 5 lakh, preferably even an EV, the two-wheeler segment will remain the default option for the bottom 200 million households,” he said. However, he also admitted that neither Maruti nor its competitors can manufacture such an affordable EV with current cost structures.
EVs Will Be A Global Play Before Domestic Maturity
Maruti Suzuki’s EV rollout, spearheaded by its new model set for commercial sale by September 2025, will be production-focused for exports in the first phase. Around 70,000 electric vehicles are planned for production this year, with the bulk destined for foreign markets. Domestically, the carmaker is cautious, acknowledging both a price barrier and a sluggish charging infrastructure build-out.
Bhargava also addressed perceptions that hybrids and EVs are at odds. “This is not EV versus hybrid, it’s both against ICE,” he remarked, stating that India must use both technologies to reduce fuel use and emissions. The firm is working on hybrids but concedes that development of small-car hybrid systems is still in early stages.
Inventory Discipline & Digitisation
In an effort to better align production with retail demand, Maruti Suzuki is transitioning to using Vahan data for inventory and model planning. This, the company believes, will ensure leaner dealership stocks and reduce unnecessary discounting. At the end of FY25, MSIL had the industry’s lowest inventory levels at just 28 days.
On the capital side, the company plans to invest INR 8,000–INR 9,000 crore in FY26, largely for capacity expansion at the Kharkhoda plant and digital transformation. The second unit at Kharkhoda is under construction, while plans for a second Gujarat plant are on hold due to weak domestic growth.
Photo: Mohd Nasir
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