Homegrown SUV major Mahindra & Mahindra has opposed any exemption or relief being granted to Maruti Suzuki for its small car segment under the upcoming stage of the Corporate Average Fuel Efficiency (CAFE) norms, according to a report by Business Standard.

Maruti Suzuki, India’s largest passenger car manufacturer, is reportedly seeking a concession under the next phase of the CAFE framework, arguing that its small cars—typically under 1,000 kg—emit less carbon dioxide (CO₂) compared to larger vehicles. However, Mahindra has countered this claim in a letter dated July 9 to the Ministry of Road Transport and Highways (MoRTH), urging the government not to dilute emission standards.

According to Mahindra, small cars made up nearly 60 per cent of the domestic passenger vehicle market in FY25 but accounted for 53 per cent of the industry’s CO₂ emissions. The company cited GST classifications to define small cars as those under 4 metres in length and with engine capacities up to 1,200 cc (petrol) or 1,500 cc (diesel).

“Granting concessions would not only perpetuate this level of emission but also lock it in for the future by removing CAFE penalty avoidance incentive for innovation in this segment towards fuel efficiency and lower emissions,” Mahindra reportedly stated.

The letter further warned that easing CAFE rules for small cars would undermine India’s goal of achieving 30 per cent electric vehicle (EV) penetration by 2030. “Globally, OEMs meet CAFE targets by intentionally deploying EVs across their vehicle portfolios, regardless of size. Limiting such innovation to larger vehicles will stall progress,” the company added.

Currently in its second phase, the CAFE norms are designed to reduce vehicular CO₂ emissions by mandating average fuel efficiency targets for automakers. The third phase is set to take effect from April 2027 and will apply to all passenger vehicles under 3,500 kg gross vehicle weight, covering those powered by petrol, diesel, LPG, CNG, hybrids and electric powertrains.

Mahindra, whose portfolio includes ICE models like the Bolero, Thar, Scorpio-N, and XUV700, and EVs such as the XUV400 and upcoming BE and XEV models, is not alone in opposing Maruti’s appeal. Tata Motors, Toyota Kirloskar Motor, and JSW MG Motor India have also raised objections to the proposed relaxation.