Maruti Chairman Says Income Tax Relief is Unlikely to Boost Small Car Sales

Maruti Suzuki India Limited Chairman R C Bhargava said on Friday that the income tax relief announced in the last Union Budget is not expected to boost the demand for small cars, which are important for the growth of the Indian car industry.

Speaking at Maruti Suzuki’s media briefing for the January-March quarter (Q4FY25), Chairman R C Bhargava said that the government needs to take action to help the small car market recover.

Maruti Suzuki, India’s biggest carmaker, reported a drop in profit for the quarter, surprising many experts who had expected no change. The profit dropped by 4.3% due to higher costs and bigger discounts, especially in the small car market. While SUV sales are booming in India, sales of cars priced below Rs 10 lakh have been slow, showing that many people still struggle with disposable income.

Bhargava pointed out that only 12% of Indian households earn over Rs 12 lakh yearly (the amount eligible for tax relief), and the rest cannot afford cars priced over Rs 10 lakh.

He also mentioned that the cost of owning a basic car has increased by Rs. 90,000, making it harder for people to afford, leading to slow growth in the domestic market.

He emphasised that for car sales to improve, small cars need to become more affordable. Bhargava added that the government recognises that without a recovery in the small car market, overall car market growth in India will remain slow.

After the disappointing results, the company’s shares fell by nearly 2% on Friday. Maruti’s profit for the quarter dropped to Rs 3,911 crore, though its total revenue rose to Rs 40,920 crore from Rs 38,471 crore last year. The company’s expenses also went up by 8.5% to Rs 37,585 crore.