Can Maruti Ride India’s Rising Ambitions to a New Era of Dominance?

Which economy is stronger: one with higher per capita income but smaller GDP, or one with a larger GDP size but low per capita income? Over the past two decades, India has emerged as one of the fastest-growing economies in the world, climbing to the spot of the fourth-largest economy.

Yet, critics point to India’s weak per capita income, which remains among the lowest for a country of its scale, and argue that this limits household consumption. Without stronger consumption, they say, India’s hopes of reaching a sustained double-digit growth rate will remain elusive.

Optimists argue that size matters more than averages. A large GDP means higher tax collections, which in turn enable greater public investments. This can set in motion a virtuous cycle of growth that eventually lifts per capita income.

But the Indian experience of the last decade has been more complicated. Government spending has played the lead role in keeping GDP growth steady, while private investment has often lagged. Companies have been hesitant to commit capital for expansion, wary of consumer demand that has not kept pace with expectations.

This gap between aggregate strength and individual weakness is most visible in India’s automobile sector. Cars are a reflection of both purchasing power and aspiration, and in India the story is full of contradictions. India's car ownership remains among the lowest in the world, at just 34 cars for every 1,000 people. The reason: nearly 88% households earn less than ₹12 lakh a year, the level of income typically needed to buy a car priced over ₹10 lakh.

Despite one of the lowest per capita incomes among large economies, the Indian middle class has shown a distinct taste for bigger and more expensive cars. SUVs, once seen as aspirational toys for the rich, are now the preferred choice for professionals. They account for 55% of the passenger-vehicle market.

A decade ago, this aspirational shift resulted in the failure of Tata’s Nano, once touted as the world’s cheapest car. Designed to bring millions of first-time buyers into the car market, it was based on the assumption that affordability was the biggest driver of choice. Instead, Indians refused to be seen driving a car that cost a little more than a two-wheeler.

No company has felt this more deeply than Maruti Suzuki. For decades, Maruti defined India’s car market, offering affordable hatchbacks that became the first car for millions of families. Its dominance was built on mileage, practicality and affordability, values that suited a country where owning a car was itself a mark of progress.

But India has changed. Today, the middle class is in no hurry to buy its first car unless it is an SUV. This change has cost Maruti close to 10% of its market share in recent years, with rivals stepping in to capture demand for stylish, larger vehicles.

Our cover story explores this shift in aspirations through the lens of Maruti. It examines the company’s struggle to win back lost ground, its belated but determined pivot to SUVs and its attempts to reposition itself as a manufacturer that can deliver more than mobility.

The story of Maruti is also the broader story of India, where statistics like per capita income fail to capture the full picture of what people want, how they consume and how they express their rising ambitions.