Two-wheelers are riskiest in terms of safety, says Maruti Chairman R C Bhargava

Bhargava said that the proposed GST restructuring is a major reform.

Maruti Suzuki India Chairman R C Bhargava today said that two-wheelers are the riskiest in terms of safety, and the country needs to consider the introduction of cars, particularly smaller models, to provide an alternative to the two-wheeler owners.

According to the official data, India is among the top two manufacturers of two-wheelers in the world in terms of volume. In FY25, the country's total two-wheeler production grew 11.3% y-o-y at 2,38,83,857 units, domestic sales jumped 9.1% y-o-y at 1,96,07,332 units, and exports increased 21.4% y-o-y at 41,98,403 units.

Addressing shareholders at Maruti's 44th Annual General Meeting (AGM), Bhargava said: "Considering that a large percentage of the population is dependent on two-wheelers for personal transportation, the high risk and discomfort associated with these vehicles, there is a need to consider the introduction of cars that will provide an alternative to the two-wheeler owners."

Referring to Japan's introduction of the K-cars (or Kei cars) during the 1950s, he said: "India needs to consider something similar to that."

The K-cars are relatively smaller in dimensions having maximum length and width of 3.4 metres and 1.48 metres, respectively. Their maximum engine size is 660cc. They even have lower safety regulations and are subject to lower taxes in comparison to bigger cars.

Bhargava observed that despite the difficult policy framework, Maruti has grown to where it is right now. According to him, the introduction of European safety and emission standards in India is among the reasons for the headwinds in the car market.

"In 2018-19, it was decided that European safety and emission standards would be introduced in India. That has been the reason why the downtrend in small cars and the overall slowing down of the car industry happened. Many of the people at the lower end of the pyramid who were buying two-wheelers were unable to buy the higher cost, safer cars," Bhargava said.

"We believe that we need to balance this situation in a manner that the users of two-wheelers can move to safer cars because two-wheelers are the most risky in terms of safety," he added.

On the government's recent Goods and Services Tax (GST) rationalisation proposal, Bhargava said that the restructuring, with only two slabs, is a major reform and will lead to our economy growing much faster and employment increasing accordingly.

While the Group of Ministers (GoM) has approved the GST rationalisation proposal, the details of the new GST structure will be known only after the GST Council meeting on September 3 and 4.

At present, the GST structure has four slabs -- 5%, 12%, 18% and 28%. As part of the rationalisation, the 12% and 28% slabs will be removed, and the 5% and 18% slabs will be retained. Also, a new 40% slab will be introduced for sin and luxury goods.

Regardless of the category, all cars are subject to a GST of 28%. Depending on the body-style, length, type of engine and engine capacity, a compensation cess, ranging from nil to 22% is also levied. Hence, the total tax can be as low as 28% or as high as 50%. All electric vehicles (EVs) come under the 5% GST slab with the compensation cess being nil.

"We are hopeful that the proposal made by the Prime Minister will result in GST on small cars being reduced to 18%. It is a matter of happiness that the government has realised that there are a large number of customers at the lower end of the market and that they need some help in these difficult times. Our sincere thanks to the Prime Minister and the government for this proposal," Bhargava said.

Maruti has the largest portfolio of small cars (sub-4 metre) in the country, including models like the Alto K10, S-Presso, Celerio, WagonR, Eeco, Ignis, Swift, Baleno, Dzire, Fronx, Brezza and Jimny. The small car sales, excluding those of SUVs, of the company declined 6.78% y-o-y at 10,32,179 units in FY25.

"We all need to see what the consequences of the new GST will be and how it will help to revive the car market. My hope and expectation is that, subject to approvals by the GST Council, we will see a revival of the small car market, we will see an overall faster growth of the car industry, we will see more industrial activity, and we will see a larger generation of employment opportunities," he noted.