Nobody sideswipes an SUV

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: The world’s cheapest car from the Tata stable might have stolen the show at the 9th Auto Expo in New Delhi, but sports utility vehicles continue to catch the fancy of consumers and are seemingly the flavour of the season. No wonder, car makers are moving in top-gear to meet the rising demand of SUVs in the country. After all, SUVs return high profits, especially those sold in India as completely built units (CBUs).

“Profit margins on SUVs that are completely imported are huge, anything in a range of 7-10%, compared with a minuscule 2-3% margin on passenger cars. Hence, manufacturers actually depend on these SUVs to garner a substantial part of their overall profits,” says an auto analyst, adding that higher the price of the vehicle, greater is the profit margin.

The Indian automobile market has evolved over the last few years in terms of SUVs. Starting with Tata Motors, M&M and Maruti, the segment now has over 10 players and around 15 models.

Recently, General Motors India came up with the Chevrolet Captive, Mitsubishi Motors unveiled the Outlander and Hyundai Motor India Ltd showcased the Santa Fe. Besides, Volkswagen is planning to come up with the Tiguan. All these cars are to be sold in India as CBUs.

According to automobile industry estimates, about 7,420 premium SUVs were sold in the country in 2007 and the number is expected to touch 10,000 in 2008 and around 25,000 by 2010, a 3-fold growth over the next five years.

However, the largest-selling SUVs are undoubtedly the entry-level utility vehicles like the Mahindra Bolero and Tata Motors’s Sumo, which are mostly used in semi-urban and rural areas. This is in addition to the high-end models like the Ford Endeavour, Maruti’s Grand Vitara, the Mitsubishi Pajero and Montero, the Honda CR-V and the Toyota Innova that have lately emerged as fast-growing segment owing to the multiple uses these vehicles can be put to.

“For people in semi-urban or rural areas, it’s the utility of the vehicles that drives sales. The vehicles are used for transportation of both passengers and goods in rural areas. However, in urban areas, it is the macho image that the vehicle lends, which is creating a huge demand among car enthusiasts,” says Dilip Chneoy, director-general, Society of Indian Automobile Manufacturers (SIAM).