Maruti Suzuki India Ltd chairman R.C. Bhargava on Friday said it is a fallacy to think that the decline in sales of small cars and the growth of the SUV market is a result of changing customer aspirations or people wanting to buy big cars.

Car buying in India is largely restricted to 12% of the households whose annual income is above ₹12 lakh, Bhargava said in a media conference call after India’s largest carmaker announced its fourth quarter earnings.

“How can you expect high growth if 88% of the country’s households are below the levels of income where they cannot afford these cars costing ₹10 lakh and above,” said Bhargava.

“What is happening is that people can’t afford small cars. Smaller and cheaper cars have become unaffordable because of the high cost of implementing regulatory measures,” he added.

Maruti’s domestic sales grew only 3% in FY25. The industry’s domestic sales growth was even lower at 2.6%. In FY25, sales of small cars declined by 9%.

“If 9% is the decline in cars which are bought by 88% of the people in this country, then where will you get growth?” asked Bhargava. “It’s a fact that people have to look at and recognise. It’s not as some people seem to think that India has become affluent and everybody wants to buy expensive cars. That would happen if the number of people having income above ₹12 lakh increases from 12% to 50%. But that’s not true today,” he said.

“For a country which has penetration of cars at just 34 to 1,000 people, this growth rate of 2-3% a year is not going to increase the penetration of motor cars in the country at all,” the Maruti Suzuki chairman warned, calling it is a cause of some worry. For FY26, industry body SIAM (Society of Indian Automobile Manufacturers) has forecast just 1-2% growth.

Bhargava said Maruti Suzuki is doing better, not because of the domestic performance, but because exports have been buoyant. Maruti Suzuki’s exports grew 17% in FY25 to 3.22 lakh units, taking its share in car exports from India to 43%.

“In the coming year, the situation is going to be very similar. Exports are expected to grow by 20% in FY26. And that is going to be the main driver of our production, sales and profits,” explained Bhargava.

The declining trend in small cars is starting to reflect in sales of large cars as well, said Bhargava. “If you look at the growth of the market, it used to grow at 8-9% compared with 1-2% projection for this year.”

When asked if the income tax exemptions for those earning up to ₹12 lakh help revive small car sales, Bhargava said he doubts it. “The cost of the car has gone up by ₹90,000 this year. People are not going to put all their income tax savings aside to buy a car. These are small households. They have many requirements. A new car will not be the top requirement of these people,” he explained.

“Domestic market growth, unless something changes, will remain muted. The government has to recognise the fact that without the revival of the small car market, car market growth in India will always be muted. If you look at the household income distribution data, you will find that 200 million households out of 300 million households have income below $6,000 per year,” said Bhargava

Maruti Suzuki will introduce six airbags in all its cars starting this year. “From a safety point of view, the government was very keen on six airbags. We will implement this desire of the government,” said Bhargava.

On the Japanese carmaker’s plans to reclaim 50% market share, Bhargava stated that 50% market share requires the market to grow and if the market is not growing, then it will be difficult to achieve.