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India is considering relaxing fuel efficiency norms for small cars weighing under 1,000 kg, following a push by Maruti Suzuki, whose small car sales have fallen sharply amid growing SUV demand, sources familiar with the matter told Reuters.
Small cars like the Alto and Wagon R—key to Maruti’s dominance in the Indian market—have seen their share drop to below 50% of the 1.7 million vehicles the company sold in the last fiscal year, down from nearly two-thirds two years ago.
A senior government official told Reuters, “There should be more benefit for small cars. Maruti has been asking for that and we agree,” underscoring concerns that declining sales of affordable models could impact the broader passenger vehicle segment.
Currently, India’s Corporate Average Fuel Efficiency (CAFE) norms link permissible CO₂ emissions to vehicle weight. The planned adjustment would reduce compliance pressure for sub-1,000 kg vehicles, which could, in turn, reduce the immediate need to electrify this segment. Maruti—whose lineup includes 10 models below this threshold—stands to benefit the most.
Automakers like Hyundai, Renault, Toyota, JSW MG Motor, and others also offer small cars, but sources said most are not in favor of varying fuel norms by vehicle size, citing risks of market distortion. Tata Motors, Mahindra & Mahindra, and Volkswagen were among those consulted in a June 17 closed-door meeting but have not publicly responded.
Suzuki Motor, in its 2024 sustainability report, emphasized that small cars benefit the environment through lower emissions and reduced material usage. India’s Ministry of Heavy Industries declined to comment, and multiple automakers did not respond to Reuters’ requests.
Renault India chief Venkatram Mamillapalle said the company trusted the industry’s trade body to “represent the collective voice … that benefits all stakeholders.”
Four sources told Reuters that such differential treatment was not discussed in prior consultations, raising concerns among some that this move may give Maruti an unfair edge.
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