For many years, the mainstay of the Indian passenger car market has been small vehicles or hatchbacks. The little car market has recently experienced tremendous pressure from the increasing demand for and sales of utility cars, particularly SUVs and crossovers. As a result, the market for tiny automobiles has fallen significantly. As the largest automobile maker in India, Maruti Suzuki has always had a vast selection of compact cars. Despite its models like the Alto K10, S-Presso, Celerio, WagonR, Ignis, etc., Maruti Suzuki still dominates the compact car market.

Once the dominant force in the Indian passenger vehicle market, the small car sector has gradually shrunk as a result of cost considerations and now accounts for less than 30% of the market overall. According to PTI, the number of entry-level vehicles costing less than ₹5 lakh has decreased from about a million units (934,538 units) in FY16 to only 25,402 units in FY25. Consumer preferences are shifting toward premium hatchbacks, which are at the higher end of the market, in the hatchback sector. Maruti Suzuki is requesting the government's help in saving the small car industry in this scenario.

Sales of vehicles such as the Alto K10 and S-Presso from Maruti Suzuki fell to 6,776 units in May 2025, compared to 9,902 units in the same month the previous year. As compared to 68,206 units in May 2024, the sales of small cars, such as the Baleno, Celerio, Dzire, Ignis, Swift, and WagonR, even fell to 61,502 units last month. This has prompted the OEM to apply for government assistance in order to revive the industry. In order to increase overall passenger vehicle sales in the nation, Maruti Suzuki has been pushing for a rebound in this sector even before.

The proportion of compact vehicles in the Indian overall PV market was 47.4% in FY18 and 46% in FY19. It has been decreasing ever since, despite a slight improvement to 46.5% in FY20. It was 45.6% in FY21, 37.5% in FY22, 34.4% in FY23, and 27.7% in FY24.

Partho Banerjee, the Senior Executive Officer (Marketing & Sales) at Maruti Suzuki India, stated in a virtual press conference that prices of small car models have risen significantly with improved regulation, which has had an impact on consumers looking to move from two-wheelers to entry-level vehicles. "So somewhere the government has to understand that if they want to fuel the growth of the auto industry, they need to understand where the problem is and how to increase the size of the pie (small car sales),” he said, adding, “Some incentives are required so that the customer who is not able to afford the car can come in and can migrate to a four-wheeler from a two-wheeler.”

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