SUVs now drive half the sales in India’s Motown

As much as 52% of the 363,733 passenger vehicles sold in September were SUVs, a record for a month, increasing their market share from about 43.6% in September 2022.

A wide range of models and higher road presence compared to small cars, which brand experts said denotes value, has triggered the shift away from hatchbacks to SUVs among a growing population of young, aspirational customers in India. “So much of car buying is about self-image — who you are, where you’ve reached. The higher road presence psychologically signals value,” said Santosh Desai, CEO, Futurebrands.

While sedans, with their long body type, epitomised luxury a few years ago, demand for SUVs exploded after carmakers introduced more compact models in the segment at affordable price points and added comfortable strappings for city drives.

SUV sales have grown to comprise 48.3% of total vehicle sales in the first six months of this fiscal year, up from 41.5% in H1FY23. The share of hatchbacks has slipped to 30% in H1FY24 from 35.1% in the same period last fiscal. Despite launches of several new models such as Hyundai Verna, Volkswagen Virtus and Skoda Slavia, the share of sedans, too, declined to 9.3% in the fiscal first half from 10.3% in H1FY23.

Dramatic increase in consumer preference
“Industry sales data clearly shows that the consumer preference for SUV body type has increased dramatically. SUVs are now almost half of the PV market,” said Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki. “Consumer research suggests that the reason for this trend is the SUV driving stance, road presence, larger ground clearance and the interior space flexibility. Additionally, with the availability of compact SUVs with the corresponding GST rate benefit resulting in lower price points, the cross consideration of SUVs with premium hatches and sedans have increased considerably.”

To be sure, there are only about 13 hatchback models currently being sold in the Indian market, as against 12 SUVs each in the entry and midsize segments, per industry estimates. Korean automaker Hyundai, which became a household name in India with its small car Santro, now garners about two-thirds of its sales from SUVs like Exter, Creta, Venue and Tucson.

Tarun Garg, chief operating officer, Hyundai Motor India Ltd, said, “The share of SUVs in our total sales stood at 54% in the first half of CY2023. Once we introduced the Exter in July, demand went up further. SUVs comprise 66% of our volumes now.”

Hardeep Singh Brar, national head (sales and marketing) at Kia India, said the share of SUVs will continue to increase going ahead. “Given the number of new launches in the space, the share of SUVs (in PV sales) is likely to go up to 52-53% in the next one year, and to 55% in 2-3 years.” The carmaker has accordingly decided to steer clear of hatchbacks and sedans, and focus on bringing in only utility vehicles for the Indian market.