Global brokerage, CLSA has downgraded the shares of Indian automotive major, Maruti Suzuki to 'sell' from 'underperform'.

The Asia Pacific-focused broker said in the report that the demand for the passenger vehicle might not rise as much as expected. The report found that the trends in the market indicates that the changes do not favor the company as customers are moving away from the small cars into large cars and utility vehicles in the country.

"Maruti specifically needs petrol car demand to improve given its diesel engine capacity constraints, which might not happen. Meanwhile, industry demand profile is changing and is moving towards segments where Maruti is less dominant," CLSA said in a report.

The company's shares have rallied in recent times over hopes of a recovery in the passenger car segment in the country. Due to the increasing challenges for India's leading car maker, the brokerage now recommends sell for its shares. CLSA downgraded the rating and revised its target price upwards to Rs 1270 from Rs 1140 earlier.

Maruti Suzuki is a leading player in the small car segment in the country and indications that the demand might not rise as much as expected has added to pressure on the share price. CLSA also noted that the company will also face increased competition after Hyundai and Honda start begin operations at their diesel plants in the country.