Indian car market and Maruti Alto

India is a big market for small cars. The sales of compact cars like Maruti Alto far exceed sales of luxury big cars in the country. Sensing this opportunity, foreign car companies, that earlier launched their luxury cars, are now coming up with small cars to drive up their sales volume.

Before the economic reforms started in the early 1990s the Indian economy was going through some real rough patch. The growth of the economy was almost stagnant at 3.0 – 3.5% per annum. A large number of people were quite poor and could not afford their private vehicle. After the economic reform initiatives, various foreign companies came to India and started to do business. It also generated jobs for the young people. As the income of people grew their desire to own vehicles also grew. This turned into growing demand for cars.

As Indians still prefer a dependable and economic car, which is not expensive, they go for small cars. Before 1990, there were few options while choosing a car. Hindustan Motors and Maruti Suzuki were the main auto players in the market. Founded in February 1981, Maruti Suzuki was the market leader with its Maruti 800 as the largest selling car in India.

Things started to change quite fast once multi-national auto companies started to come up with their cars. Soon, Indian consumers had choices to make in all segments of cars. More than a decade later, India is a fast growing car market with new car launches almost every week. Almost all major car companies operate in this market and competition is getting intense. Even luxury car makers like Audi, Mercedes and BMW are seeing good rate of growth in the market. However, small car companies like Maruti, Hyundai and Tata Motors are still ruling the sales charts.

Interestingly, Maruti Suzuki is still the market leader in sales with its model Maruti Alto as the largest selling car.