Even with the burgeoning SUV craze in India, small cars in India still have buyers, especially those who are purchasing their first cars and those who want a vehicle on a budget. The chairman of Maruti Suzuki, R.C. Bhargava, considers the small cars segment to be crucial to the company’s success, citing nearly 3.98 lakh small cars sold by the company in the first half of FY2026-27, compared to 1.62 lakh SUVs.
This revival is due to cheaper GST rates making cars more affordable to entry-level buyers.
Small Cars in India – Why There is a Resurgence in Demand
Bhargava questions the notion that Indians are now looking for SUVs packed with luxurious features. The resurgence in the demand for small cars was made possible by the GST reforms implemented in September 2025 and reduced the tax rate for small cars to 18% from 28%.
This has made car buying easier for middle and low-middle-class families. Additionally, Maruti Suzuki has increased its production capacity despite having higher demand than its supply.
First-Time Buyers Are Back in the Market
Maruti Suzuki reported that the proportion of first-time buyers in its sales was 54% in April-August 2026, compared to 42% in the same period a year ago. This is clearly indicative of the move towards purchasing low-end vehicles.
There are similar observations being made by other car makers as well. The proportion of first-time buyers at Tata Motors has gone up by 6-7% over the last one year, whereas the sales of low-end SUVs by Mahindra have increased by 20% in the first five months of FY2026-27.
Alto, S-Presso and WagonR See Higher Sales
The sales of Maruti Suzuki’s Alto and S-Presso rose by 96% to 67,334 units during April-August 2026 period even as they had risen from a low base.
The sales of cars with 18% GST rose by 29% to 12.4 lakh units in the same period. The segment includes models like the Alto, WagonR, Tata Punch and Mahindra Bolero.
But SUVs are still a strong force. The sales of passenger vehicles in the 40% GST bracket, which includes the likes of Hyundai Creta and Kia Carens, saw a rise of about 21%.
Production, Inventories and Exports
Maruti Suzuki had an approximate dealer inventory of 17 days and 2 lakhs of bookings outstanding at the end of September 2026. The above numbers reflect the difficulty of meeting the customers’ demands.
Exports were at 1,08,119 vehicles in the current quarter against 1,10,487 in the previous year, despite geopolitical tensions. Although the monsoon rains have been poor, Bhargava was optimistic about the country’s future economic prospects and increasing consumer aspirations.
Will Small Cars Survive the SUV Boom?
Small cars will keep catering to those customers who value affordability, compactness and low running costs. While the SUVs provide higher ground clearance and higher driving position, they are not always the more practical choice for everyone. It is important for car manufacturers to keep offering inexpensive variants in order to attract two-wheeler users and first-time buyers into the market for passenger cars.
Racing Ability: An Honest Viewpoint
Small cars have been manufactured to serve as affordable means of transport, not racing vehicles. Lightweight hatchbacks like the Alto and S-Presso are quick around the city streets, yet the small engines are not designed for track performances. Even if the turbocharged SUVs provide higher accelerations, it doesn’t necessarily make them good racing vehicles. The only thing about small cars is their practicality in daily usage, not speed.
Conclusion
The performance numbers of Maruti Suzuki cars indicate that small cars are still very relevant in India. Reduction in GST, the comeback of first-time buyers, and better affordability are some of the factors which have helped revive interest in these cars.
For car makers, the challenge is to make entry-level cars affordable despite the growing popularity of SUVs.