Sport-utility vehicles (SUVs) have taken over the Indian passenger vehicle market, accounting for half of all sales and doubling their market share in just five years. This surge in demand for SUVs has come at the expense of once-popular small cars.
In September, SUVs made up 52% of the total passenger vehicles sold, which was a record month for SUV sales. This marked an increase from their market share of about 43.6% in September 2022.
The shift from hatchbacks to SUVs can be attributed to the wide range of models available and their higher road presence, which signifies value. This change in preference is largely driven by the young, aspirational customers in India. Santosh Desai, CEO of Futurebrands, explains, “So much of car buying is about self-image — who you are, where you’ve reached. The higher road presence psychologically signals value.”
The introduction of more compact SUV models at affordable prices and improvements in comfort for city drives have further fueled the demand for SUVs. Sedans, which were considered a luxury a few years ago, have seen a decline in demand. Despite the launch of new sedan models, their market share has decreased to 9.3% in the first half of this fiscal year from 10.3% in the same period last year.
Dramatic Increase in Consumer Preference
Shashank Srivastava, senior executive officer at Maruti Suzuki, emphasizes the significant shift in consumer preference towards SUVs. He explains that consumers are drawn to the driving stance, road presence, larger ground clearance, and interior space flexibility offered by SUVs. Additionally, the availability of compact SUVs with lower price points due to corresponding GST rate benefits has further increased the consideration for SUVs over premium hatches and sedans.
In the Indian market, there are currently only 13 hatchback models available compared to 12 SUV models in the entry and midsize segments. Korean automaker Hyundai, known for its small car Santro, now generates two-thirds of its sales from SUVs like Exter, Creta, Venue, and Tucson.
Hyundai Motor India’s Chief Operating Officer, Tarun Garg, states that SUVs account for 54% of their total sales in the first half of CY2023, with even higher demand since the introduction of the Exter in July. Hardeep Singh Brar, National Head of Sales and Marketing at Kia India, expects the SUV market share to continue growing, reaching 52-53% in the next year and 55% in 2-3 years. As a result, Kia India is focusing solely on utility vehicles for the Indian market.
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