The country’s top two car makers, Maruti Suzuki India and Hyundai Motor India, recorded a decline in domestic passenger vehicle sales in May, pointing to persistent challenges in the auto sector, especially in the small car segment.
Maruti Suzuki reported a 5% year-on-year drop in domestic sales, with 148,858 units sold in May 2025 compared to 157,184 units in the same month last year. Hyundai Motor India, the second-largest player, saw an even sharper fall of 11%, selling 43,861 units against 49,151 in May 2024. Hyundai attributed the fall to a planned week-long biannual maintenance shutdown at its Chennai facility, which impacted the availability of some models.
While the decline in sales raised concerns, Maruti also addressed another pressing issue of China’s export curbs on heavy rare earth elements. These minerals are essential for manufacturing magnets used in electric and hybrid vehicles, among other applications. In April, Beijing mandated special licences and detailed end-use declarations for exports of seven key rare earths.
Responding to questions about the impact of the curbs, Rahul Bharti, senior executive director, corporate affairs at Maruti, said there has been no immediate disruption. “The government is quite receptive and supportive. It’s not a restriction, but an endorsement of end-use. Until we receive a response to our applications, it is difficult to say anything,” he said.
When asked about alternative sourcing, Bharti acknowledged that the issue needs more in-depth deliberation. “That’s a larger question that will need more studies. Where are other sources available?” he noted.
Maruti also flagged the ongoing decline in the small car segment, which it sees as a major concern. Entry-level cars priced under Rs 5 lakh, once accounting for over a million units in FY16, dropped drastically to just 25,402 units in FY25. These now represent less than 30% of the company’s portfolio.
Partho Banerjee, senior executive officer, marketing & sales at Maruti Suzuki, said higher regulatory costs have pushed up vehicle prices, hurting first-time buyers seeking to upgrade from two-wheelers. “The government needs to understand where the problem lies and how to grow the market for small cars,” he said, urging for incentives to help revive demand.
Despite domestic headwinds, Maruti is aiming to export 400,000 units this fiscal, as it looks to tap overseas demand to support overall volumes.
