Small cars strike back: Maruti Suzuki bets on mass mobility while costs squeeze fourth quarter profits

As capacity expands and affordability remains central to mobility, is doubling down on entry-level cars even as dominate headlines, signalling that the next phase of India’s auto story could be less about premiumisation and more about scale.

“We are planning to develop both and SUVs. The small car market is growing. India is a country where small cars have a long-term future,” the said R. C. Bhargava, the company’s chairman in a call with reporters, underscoring a strategy that leans on volume growth in a price-sensitive market where “a large part of the population… need small cars” for basic mobility.

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The bet comes at a time when India’s largest carmaker reported a surprise drop in quarterly profit, highlighting a widening disconnect between strong demand and weakening profitability across the sector.

For the quarter ended March 31, the Swift-maker posted a profit of 3591 crore rupees, down from 3857 crore rupees a year earlier and below analyst estimates, as a sharp surge in costs offset gains from higher sales.

Raw material costs jumped nearly 51%, pushing total expenses up 28% and compressing margins by 270 basis points to 7.2%. A steep 67.3% fall in other income, including mark-to-market impacts in the final quarter, further weighed on earnings.

Yet, demand remains resilient.

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“Nothing adverse is happening due to war in demand. Could be issue of higher prices, but it’s all okay. Nothing much to worry about,” added Bhargava, suggesting that geopolitical tensions have so far not dented consumer appetite, even if they have contributed to higher input costs.

Revenue rose to 52,449 crore rupees, supported by improved realisations and volumes, as tax cuts earlier in the year helped revive showroom traffic. Domestic sales rose 3.7%, while overall volumes, including exports and supplies to Toyota, climbed nearly 11.8%.

If anything, the bigger constraint is supply, not demand.

At the same time, the company is hedging its bets, continuing to expand its SUV portfolio to capture higher margins even as it defends its traditional stronghold in entry-level vehicles.

Beyond India, new trade agreements such as the New Zealand FTA are opening up fresh export opportunities, offering another lever for growth as the company looks to diversify markets, the chairman said on the call.

For now, the message from India’s auto bellwether is clear: demand is holding firm, but profits are under pressure. And in that equation, the humble small car — not just the flashy SUV — may once again become central to the industry’s growth story.