Changing gears: India’s love for SUVs going strong

Head-to-head, UVs outsell sedans, hatchbacks in Q1FY22

The growing trend towards SUVs has led to the segment selling more than sedans and hatchbacks

In what confirms Indian car buyers’ increasing preference for utility vehicles (UVs) over sedans and hatchbacks, in the first quarter (April-June) of FY22 the former have outsold the latter in the sub-segments both are present in (excluding the mini segment— cars under 3,600 mm in length — where there are only hatchbacks).

According to sales data by the Society of Indian Automobile Manufacturers (Siam), in the April-June 2021 period, hatchbacks and sedans put together sold 2,83,816 units, while UVs sold marginally more at 2,86,092 units.

This was a reverse of the trend in the January-March 2021 period, when hatchbacks and sedans sold 3,79,742 units, and UVs trailed at 3,48,194 units.

Part of the reason, analysts told FE, is six new UVs being launched in recent months (Nissan Magnite in December, new Jeep Compass in January, Renault Kiger and Tata Safari in February, Citroen C5 Aircross in April, and Hyundai Alcazar in June) whose sales picked up in April-June, even as there were no new sedans launched and just two hatchbacks (new Hyundai i20 in November and Tata Altroz iTurbo in January).

However, the bigger reason is consumers’ realisation that UVs are ‘more car per car’ (incidentally, this was the tagline of Tata Indica, a hatchback).

Som Kapoor, partner, automotive sector, EY India, said Indian car buyers have started realising that UVs have comparatively more space, and offer better comfort, driving experience and manoeuvrability, compared to sedans or hatchbacks. “In urban markets in particular, the average car-buying age is coming down, and younger buyers, in general, prefer good driving dynamics and customisation over traditional features such as fuel efficiency,” he said.

Rajeev Singh, partner & leader, automotive, Deloitte India, added that the ongoing shift to UVs, and SUVs in particular, is also because these enjoy higher resale value compared to a hatchback or an entry-level sedan. He said a large number of used cars go to smaller towns, where people are now preferring SUVs — due to their higher ground clearance — as these areas may not have as good a road infrastructure as in urban areas. “This leads to more demand in the aftermarket, and thus higher resale value of a new SUV,” he said.

He added that when an average Indian buyer in the price-sensitive segment of Rs 6-8 lakh goes to buy a car, she calculates how much cubic feet of space she is getting for her money. “The overall cabin space you get in a UV body shape is slightly more than in a sedan of similar proportions,” Singh said, adding, “All these angles are coming into play for this shift from hatchbacks and sedans to UVs.”

Going forward, UVs are expected to be in a neck-and-neck race with hatchbacks and sedans for the next three quarters, after which they will surpass the latter. According to a recent IHS Markit forecast, in FY23 UV sales will surpass those of sedans and hatchbacks put together (even including the mini segment).

Gaurav Vangaal, associate director, IHS Markit, told FE that in the next three quarters Maruti Suzuki will launch new generations of the Baleno, Celerio and Alto, which will push hatchback sales, and Tata is expected to launch the Hornbill (an entry-level SUV), which will push UV sales. “But, overall, with clear consumer preference towards UVs, India will become a UV country by FY23,” he said.

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