Maruti targets 10% growth in FY27 but margin pressure lingers, says RC Bhargava

Maruti Suzuki India's Chairman RC Bhargava struck a cautiously optimistic tone in a wide-ranging interview with ET Now, projecting 10% volume growth for FY27 while acknowledging that margin recovery will be a more gradual and carefully managed affair.

Volume growth: Maruti outpaces the industry

Bhargava was unambiguous on growth. While the Society of Indian Automobile Manufacturers (SIAM) has guided for industry-wide growth of 5–7%, Maruti is targeting 10%, a figure underpinned by fresh production capacity rather than demand assumptions alone.

The company has added one new production line each at its Kharkhoda and Hansalpur plants. Together, these lines are expected to contribute approximately 250,000 additional units in FY27, with full capacity utilisation reached before year-end. "We cannot grow faster than that because there is no capacity to produce more cars," Bhargava said plainly, a candid acknowledgement that the constraint is supply, not demand.


Channel inventory has been running lean and order books remain strong, both signs that underlying consumer appetite for Maruti vehicles is healthy.

Rural demand leading the recovery

On the demand side, Bhargava pointed to a continuation of a trend that has emerged in recent years: rural markets growing slightly faster than urban ones. First-time buyer activity is also picking up, signalling a recovery at the entry level — a segment Maruti dominates. This rural-led demand recovery adds a layer of resilience to the growth outlook that is less dependent on discretionary urban spending.

Margins: No quick fix

The trickier story is margins. Commodity inflation, particularly in steel and precious metals, dented margins in the most recent quarter. Bhargava was careful not to promise a swift recovery, and made clear that Maruti will not automatically pass on input cost increases to customers.

"Every time a commodity price goes up, if we increase the price, then prices will always keep going up — because when commodity prices come down, nobody reduces prices," he said. The company will assess total market conditions before deciding on any price revision, balancing the need to protect margins against the risk of dampening demand.

With global commodity prices driven by factors largely outside Maruti's control, including the ongoing Iran conflict and its impact on shipping and input costs, Bhargava acknowledged that precise forecasting is not possible.

Exports: Holding steady at 4 lakh units

On exports, Bhargava maintained the target of approximately four lakh units for FY27, broadly in line with the 4.47 lakh units achieved in FY26. While some geographies such as South Africa have posed logistical challenges, new markets are opening up and fresh Free Trade Agreements are creating incremental opportunities. The net picture, he suggested, is one of stability rather than growth or decline.

Fuel mix and the energy wildcard

Asked about the impact of the global energy crisis on fuel preferences, Bhargava noted that CNG vehicles have been gaining popularity steadily. However, he cautioned that the crisis is affecting all fuel types — petrol, diesel, and CNG alike — through shipping constraints and supply uncertainty. Whether the disruption is short, medium, or long term remains unclear. On mark-to-market losses in other income, he was reassuring: these are accounting entries on securities held to maturity and should be treated as one-offs.

The bottom line: Maruti enters FY27 with its strongest capacity position in years, a loyal rural buyer base, and an export portfolio that is holding its ground. The variables, commodity costs, energy prices, and geopolitical spillovers, are real but manageable. For investors, volume growth looks credible. Margin expansion will take longer and will depend heavily on how global headwinds evolve.