The country’s largest carmaker Maruti Suzuki India is planning to shift its focus to higher-end passenger vehicles as small cars — its main source of income — become more expensive and demand for them shrinks.

The carmaker reported a 51.14 per cent jump in consolidated net profit to Rs 1,875.8 crore in the fourth quarter ended on March 31, 2022. The company had posted a consolidated net profit of Rs 1,241.1 crore in the same period of the previous fiscal, Maruti Suzuki India said in a regulatory filing.

“Small cars used to be our bread and butter. There’s no butter in small cars anymore. We will have to change our strategy,” Maruti chairman R.C. Bhargava told reporters.

He said the market for hatchbacks is “shrinking significantly.”

There has been a 25% decline in the market for hatchbacks in the last four years due to increase in commodity prices and taxes by state governments, Bhargava said. Maruti will adjust its investments to align with demand, which is in higher-end cars, Bhargava said.

Maruti will invest Rs 160 crore to expand the annual capacity of its Manesar plant by 100,000 units by April 2024, Bhargava said. Its capital expenditure for the financial year 2023 is expected to be Rs 5000 crore, he said.

Consolidated total revenue from operations stood at Rs 26,749.2 crore as against Rs 24,034.5 crore in the fourth quarter a year ago, it added. Total vehicle sales in the quarter under review stood at 4,88,830 units, lower by 0.7 per cent compared to the same period previous year.

Domestic sales were at 4,20,376 units, a decline of 8 per cent over that in Q4 FY21, the company said, adding exports were at 68,454 units which is the highest ever in any quarter.