Income Tax Relief Won’t Boost Small Car Demand: Maruti Chairman
By Author | April 27, 2025
Income Tax | Recent News 2025
Small Car Segment Faces Continued Challenges
The income tax relief announced in the last Union Budget is unlikely to revive demand for small cars, according to Maruti Suzuki India Ltd Chairman R.C. Bhargava. Speaking at the post-earnings media briefing for MSIL’s January-March quarter (Q4FY25) results, Bhargava emphasized that more targeted steps are needed to boost this segment.
Rising Costs Hurt Small Car Affordability
Maruti Suzuki posted a 4.3% drop in Q4 profit, surprising analysts who had expected flat results. Higher expenses and deeper discounts, especially in the small car segment, led to the decline. While sales of SUVs continue to rise, vehicles priced below ₹10 lakh have seen muted demand. Bhargava pointed out that low disposable income among India’s aspiring middle class remains a major hurdle.
According to him, only 12% of Indian households earn above ₹12 lakh annually—the income group eligible for tax relief. The rest find it difficult to afford vehicles priced at ₹10 lakh and above.
High Entry-Level Car Prices Limit Growth
Bhargava noted that the cost of owning an entry-level car has risen by nearly ₹90,000 per unit. This surge has made car ownership out of reach for many, stifling the growth of a market that is already under-penetrated.
“For car sales to revive, small cars must become more affordable,” he said. “The government has largely recognized that without a strong small car market, overall car market growth will stay muted.”
Maruti Suzuki’s Financial Snapshot for Q4FY25
Shares of Maruti Suzuki fell nearly 2% on Friday after the disappointing results. The company’s consolidated net profit dropped to ₹3,911 crore, while total revenue rose to ₹40,920 crore compared to ₹38,471 crore in the same quarter last year. Total expenses increased by 8.5% year-on-year to ₹37,585 crore.
