Auto firms need to think innovatively to attract buyers back to small cars

Car-market executives attribute the drop in small-car sales to stagnating incomes across the board, with only 12 per cent of Indian households earning over ₹12 lakh annually

The emerging structure of the passenger-vehicle market offers a potent example of India’s K-shaped post-Covid economic recovery. The share in sales of more expensive and heavily taxed sports utility vehicles (SUVs) crossed 50 per cent in FY25 and appears on track to accelerate. Meanwhile, sales of small cars in FY25 crawled up just 2 per cent. Sales of Maruti Suzuki, India’s largest carmaker, are indicative. Against a modest growth rate in domestic sales of 2.6 per cent in FY25, sales of small cars (defined as cars up to 4 metres in length and with 1,200-1,500 cc engines) dropped 9 per