Maruti Suzuki has taken a stark public position on the draft CAFE (Corporate Average Fuel Economy) norms, saying that without the government’s proposed weight-based relief for small cars, makers of entry-level models could be forced to discontinue them.
The draft norms allow a targeted relaxation for certain small petrol cars: Vehicles that weigh less than 909 kg, have engines of up to 1,200 cc, and measure no more than 4 metres in length may claim an additional 3 g CO₂/km reduction in declared emissions—effectively easing their compliance burden. Maruti has argued the provision is crucial for preserving the viability of the entry-level segment, which the company dominates.
Rahul Bharti, senior executive director at Maruti Suzuki India, on Monday said that without this allowance, the targets become “unscientific”.
“The risk is if the targets become unscientific, if they become unjust, then just to meet CAFE regulations, small cars—that produce very low absolute carbon emissions—will have to be discontinued. That is something we don’t want,” he said on a post-sales media call.
Targets, he insisted, should not be “globally unachievable”. The company pointed out that most major markets—from China and Japan to the US and Europe—structure fuel-economy rules around vehicle weight.
The industry is divided on the weight-based relief, with most automakers against such relaxation as they see this benefiting only one carmaker (Maruti). Bharti played down the split. “The industry is not divided on CAFE norms,” he said. “The only point of contention is on relaxation to small cars, where we would have liked for people to have taken a nationalistic view instead of a company view.”
Small cars remain a significant—if diminished—part of the passenger vehicle market. Hatchbacks have around 20 to 22 percent market share currently, according to the Federation of Automobile Dealers Associations. This comes amid a rapid shift toward SUVs in India, a growth that came at the expense of small cars.
Maruti’s argument is that the entry-level segment did not shrink because consumers moved to SUVs, but because small cars became unaffordable for many.
The policy choice carries implications beyond OEM lineups. The entry-level segment remains the default upgrade for families graduating from two-wheelers to cars. Fewer or no entry-level cars would widen the affordability gap between two-wheelers and cars, making the leap to four-wheelers more expensive and potentially delaying vehicle upgrading for price-sensitive consumers. That, in turn, could compress the addressable market for carmakers as a market only expands when newer consumers come in.
That is bad news both for the car industry and consumers. Small cars have of late seen some bounceback after the cut in Goods & Services Tax made them affordable again.
Maruti said it saw a 40 percent year-on year jump in bookings for its hatchbacks in November, while the growth in retail sales was 37 percent.
Maruti’s argument is that without relaxations in CAFE norms, small cars will again become unviable. “If relaxation is not given, no car in the world can meet these unscientific targets even by a distance,” said Bharti.
First Published: Dec 01, 2025, 21:39
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