New launches and facelifts in the under-4 metre SUV segment are expected to remain limited this calendar year, suggesting that the category’s recent slowdown could extend into 2026 even as overall passenger vehicle demand stays firm.
Industry executives and analysts said the compact SUV segment, which drove much of the growth in the years immediately after the pandemic, is entering a phase of consolidation. While buyers will see some new options in hybrids, electric vehicles and more premium offerings, the pipeline is not large enough to deliver a sharp rebound in volumes in the near term.
Numbers Game
Data from the Society of Indian Automobile Manufacturers shows that compact SUVs, typically priced between Rs 6 lakh and Rs 15 lakh (ex-showroom), declined 3.1% in 2025 to 1,222,837 units, down from 1,261,903 units in 2024. This came even as the overall passenger vehicle market grew 5% to 4,489,717 units and the broader SUV category expanded 7.4% to 2,954,279 units.
With only a handful of launches and refreshes expected in 2026, analysts said the segment may struggle to regain momentum immediately. Models under development include new compact SUVs from the Volkswagen group and Tata Motors, a strong-hybrid variant from Maruti Suzuki, and facelifts of existing bestsellers. Hyundai and Honda are also expected to introduce new sub-4 metre SUVs by the end of 2026.
“The success of recent launches has encouraged manufacturers to prepare follow-up products, but timelines suggest that most of the impact will be seen only gradually,” an automotive analyst said. Interest is also building around electric versions, following recent entries by Mahindra and upcoming plans from Kia, though volumes in this price band are expected to ramp up slowly.
The muted outlook for 2026 follows a sharp change in trend in 2025. Between 2020 and 2024, compact SUV volumes nearly tripled, rising from 418,672 units to 1,261,903 units, while their share of the passenger vehicle market climbed from 17.2% to 29.5%. That surge was driven by buyers seeking higher ground clearance and a more imposing road presence, often at the expense of hatchbacks and compact sedans.
In 2025, however, the pace slowed due to a combination of factors. There were only three major launches during the year, limiting incremental demand. At the same time, a resurgence in compact sedans diverted some buyers, while others chose to move up to larger vehicles.
Trading Up
This up-trading trend benefited the midsize SUV segment, which grew 8.9% in 2025 to 824,216 units, supported by strong sales of established models and the arrival of newer, more aspirational nameplates. Analysts said this shift reflects rising incomes among urban buyers and greater availability of financing, trends that are likely to continue.
As a result, while compact SUVs are expected to remain a significant part of the market, industry participants see 2026 as a year of stabilisation rather than renewed rapid growth.
