FORBES INDIA EXCLUSIVE Maruti Suzuki Chairman Bhargava calls for new class of cars to spur sales

R C Bhargava, Chairman of Maruti Suzuki, India’s largest carmaker, has suggested creating a new category of cars to revive the market by narrowing the price gap between two-wheelers and entry-level cars.

These cars, on the lines of the Kei cars that revolutionised the market in Japan from the 1950s onwards, would be smaller and intended primarily for city driving. According to Bhargava, they will have lower taxation and compliance requirements which will bring their price down and make it easier for two-wheeler owners to upgrade to cars.

“We do not talk enough about people who own two-wheelers. How do they live? What do they think?” Bhargava tells Forbes India in an interview.

Two-wheelers constitute the bulk of the regular commute in the country. Official data shows 185 two-wheelers for every 1,000 people in India—one of the highest in the world—but only 34 cars, which is one of the lowest in the world. Sales of passenger vehicles (cars and utility vehicles) touched an all-time high of 4.3 million in 2024-25, but that was a growth of only 2 percent over the previous financial year. Two-wheeler sales, on the other hand, grew at a much healthier rate of 9.1 percent to 19.6 million units sold.

Data also shows that two-wheelers account for nearly half of all road deaths in the country. “What should be done for this segment? We have not handled the problem of two-wheeler owners,” Bhargava says. “Putting six airbags in cars does not help them. That makes it more difficult for two-wheeler owners to buy cars by making cars more expensive.”

RC Bhargava’s full interview appears in the forthcoming issue of the magazine

Japan demonstrated, back in the 1950s, how this problem could be addressed. Starting in 1949, the war-devastated country, riddled with poverty and facing shortage of steel and petrol, introduced the Kei class of cars. Kei is short for keijidosha, Japanese for light, or compact, automobile. These, mandated by the government, had smaller bodies and engines. They were priced lower and took off in a big way, to the extent that this class of cars continues to account for about a third of car sales in Japan. Current rules limit their engine to 660 cc and body to 3.4 metre in length, 1.48 metre in width, and 2 metre in height, but the Kei cars have become far more modern and sophisticated.

In contrast, sales of small, entry-level cars in India have collapsed and utility vehicles were 65 percent of all passenger vehicles sold in 2024-25, up from 60 percent the previous financial year.

“People say Indian aspirations have changed and everyone wants to upgrade to SUVs (sports utility vehicles). That is utter nonsense! Do they mean to say these people riding scooters want to buy SUVs and therefore are not buying small cars?” says Bhargava.

According to him, people have no choice but to stick to two-wheelers, because they cannot afford cars, which have become more and more costly.

“What does India need? My sense is that the bulk of the driving people in India do is within the city. Intercity driving is limited. So, why do we design cars which are only for highway driving at high speeds? Is that the correct thing for India?” says Bhargava.

(Suveen Sinha is Editor, Forbes India)