In calendar year (CY) 2015, the compact low hatchback sub-segment contributed to 13.4% overall passenger vehicle sales in India, compact mid 12.5%, compact high 14.8% and compact premium 8.2%. By CY2020, the compact premium hatchback sub-segment had improved its sales share from 8.2% to 13%, while that of compact low dropped to 10.9%, compact mid to 11.6% and compact high to 11.6%. Compact low are cars such as the Alto; compact mid are cars such as the Santro; compact high are Swift and i10 etc; and compact premium are Baleno, i20, Altroz, Polo, Jazz, etc. An increasing number of Indians are now buying compact premium hatchbacks, such as Maruti Suzuki Baleno and Hyundai i20, as their first car, say analysts.
Sanjeev Garg, practice leader, automotive, Praxis Global Alliance, says the trend started showing clearly from 2018 onwards, and attributes four reasons for this. “One, there are a lot of new cars in this segment, including Tata Altroz and Toyota Glanza. The Baleno is still doing 50% sales in this sub-segment, and the i20 has picked up in a big way. Two, the aspirations of the youth are changing—they want features such as Android Auto and Apple CarPlay, sunroof, touchscreen, etc, and premium hatchbacks offer these. Three, while in rural area and smaller cities people still buy entry-level hatchbacks as their first car, in tier-1 cities and metros they have shifted towards premium hatchbacks. Four, there is easy access to finance and low EMI—at an interest rate of 8-9%, the EMI difference between a premium hatchback and entry-level could be merely `3,000.”
One trend that has picked up is sunroof. Tarun Garg, director, sales and marketing, Hyundai Motor India, told FE that about 30% bookings of the new i20 are of the variant with the sunroof. Som Kapoor, partner, automotive sector, EY India, says the sunroof is a differentiating factor. Even though in a climate such as India people may not use it most of the time, they want a sunroof. “If you look at an advertising of any car that has a sunroof as an option, the ad will always display the sunroof. Kids in particular want it, and they are decision-drivers.”
He adds that many premium hatchbacks offer a sunroof, as also features such as connectivity, which may not be there in entry-level hatchbacks. “Indian consumers are maturing; they want feature-rich cars, those that offer a lot of features on the dashboard,” he says. Recently, Deloitte had released the ‘2021 Global Automotive Consumer Study’, which, among other things, noted that 65% of consumers in India intend to acquire a less expensive vehicle than earlier planned because of the Covid-19 pandemic. But the study also added that “there is a positive consumer perception of connected vehicles that appears to be edging up, and safety features are the top priority for 89% Indian consumers”. Premium hatchbacks are perceived to be safer than entry-level hatchbacks and also offer ‘connected car’ features.
Rajeev Singh, partner & automotive leader, Deloitte India, says that connectivity and safety are features that were traditionally not on the top of the list for Indian buyers, but now they are. Going forward, Garg from Praxis says that the sales share of premium hatchbacks will continue to increase. “While entry-level hatchbacks are now primarily bought by those who are upgrading from two-wheelers and in smaller towns, premium hatchbacks are becoming the first car of choice for those in bigger cities — the ‘dual income, no kids’ generation.”
Maruti Suzuki India on Saturday said its hatchback Swift has emerged as the best selling car model in India in 2020 with 1,60,700 units.
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