Most Indians Can't Even Afford Entry-Level Cars. Maruti Suzuki Chairman Explained Why

New Delhi: In a rare moment of candour straight from the top of India’s auto industry, Maruti Suzuki Chairman R.C. Bhargava has laid bare a sobering truth, that most Indians simply cannot afford to buy even the most basic car anymore. This is not a matter of shifting aspirations or changing tastes, he insists; it is a crisis of affordability, driven by stagnant incomes and relentless cost escalation.

“If you look at the household income distribution data, you will find that 200 million households out of 300 million households are having income below $6,000 per year,” Bhargava explained in his latest post-earnings call on April 25, referencing figures that translate to roughly Rs 5 lakh annually for two-thirds of Indian families.

The picture gets no brighter as you move up the income ladder. “The households which have incomes above $25,000 and between $18,000 and $25,000 they are about 8%. If we go up to 12 lakh of rupees which is about $14,000 we get another 5-6% added. So about 12% households in India are above 12 lakhs income annually,” he said.

The implication is stark and sobering.

Only about 12% of Indian households have the purchasing power to even consider buying a car priced at Rs 10 lakh or more, a threshold that, thanks to rising input costs, higher taxes, and stringent safety and emission regulations, now defines the entry point for car ownership in India.

“To buy a car costing 10 lakh plus, you normally would need to be in this household bracket of 12 lakhs plus,” Bhargava noted. “Car buying in India is largely restricted to this 12% of households.”

The numbers are already biting.

Small car segment records decline in sales

Entry-level models, once the pride of India’s mass market, have seen sales tumble. Maruti Suzuki’s own small car segment, the traditional backbone of its business, recorded a 9% sales decline in 2024. Since 2020, regulatory changes have pushed up the cost of a small car by nearly Rs 90,000, putting even the humble Alto or WagonR out of reach for families with budgets of Rs 5-7 lakhs.

Bhargava is blunt about the consequences: “How can you get high growth if 88% of the country are below levels of income where they cannot afford these cars costing 10 lakhs and above?” The dream of mass car ownership, he suggests, is slipping away not because Indians don’t want cars, but because they have been priced out of the market.

He dismisses the notion that the decline of small cars and the rise of SUVs reflects a shift in consumer preference. “It’s a fallacy to think that the decline in the small car market and the growth of the SUV market is a result of people’s aspirations changing and people wanting to buy big cars and not wanting small cars,” Bhargava said. The reality is far more prosaic. Most Indians simply can’t afford even the cheapest new car.

The rhetoric of the world’s fastest growing big economy or the fifth largest economy flies in the face of lived realities of the overwhelming majority of Indians, who face the harsh reality of falling incomes, high inflation and record joblessness.

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