SUVs accelerating: Not only sedans, compact sedans also lose speed

The five sub-4 metre sedan models available in India may be the last of such ICE cars globally; sub-4 metre sedan sales have halved since 2015

Sub-4 metre sedan is a segment unique to India—it was born out of a 2006 legislation that allowed cars under 4 metres in length to qualify for lower excise duty. Quick to exploit Indians’ craze for sedans at the time, Tata Motors chopped some inches off the Indigo, and thus was born the Indigo CS (Compact Sedan)—India’s first sub-4 metre sedan. Soon, Maruti Suzuki made the segment popular with the Swift Dzire, and global carmakers jumped in—from Hyundai (Xcent, Aura) to Honda (Amaze) and from Ford (Aspire) to Volkswagen (Ameo).

However, from the peak of 4,56,551 units sold in CY2015, sub-4 metre sedan sales dropped to just 2,13,874 units in CY2020—according to SIAM data and company reports—with VW discontinuing the Ameo (2016-20) and Hyundai replacing the Xcent with the Aura (in the PV segment)*.

Rajeev Singh, partner & automotive leader, Deloitte India, says SUVs have crowded out sedans across segments. “An SUV looks more muscular, and offers more cabin space and almost similar boot space as a sedan. Indian consumer puts a premium to the space inside a car,” he says. “Consumers have also realised that SUVs are better suited to Indian road conditions (which are still a work in progress), because these have higher ground clearance.”

Som Kapoor, partner, Automotive Sector, EY India, says the ‘crowding out’ is especially apparent in the sub-4 metre space. “There are 10-odd sub-4 metre SUV models in India, compared to just five sub-4 metre sedans,” he says.

The first ‘popular’ sub-4 metre SUV to be launched in India was Ford EcoSport (in 2012), followed by Maruti Suzuki Vitara Brezza (2016), Honda WR-V (2017), Tata Nexon (2017), Mahindra XUV300 (2019)**, Hyundai Venue (2019), Kia Sonet (2020), Toyota Urban Cruiser (2020) and Nissan Magnite (2020). Next month, Renault will launch the Kiger.

The sub-4 metre sedans currently available are Maruti Suzuki Dzire, Hyundai Aura, Ford Aspire, Honda Amaze and Tata Tigor.

Kapoor attributes two more reasons for this shift. “One, we saw during the pandemic that sales of pre-owned cars shot up, and it could be a possibility that a section of buyers, instead of buying a new sub-4 metre sedan, shifted to pre-owned bigger SUVs available at more or less similar price. Two, a new body shape always excites consumers. Over the years a sub-4 metre sedan was the most common car seen on Indian roads, and when consumers got choice in a different body shape, they moved.”

Sanjeev Garg, practice leader, Automotive, Praxis Global Alliance, says that in addition to SUVs, even premium hatchbacks (such as Hyundai i20, Maruti Suzuki Baleno and Tata Altroz) are eating into sedan sales. According to SIAM data and company reports, sales of premium hatchbacks have grown from 2,25,129 units in CY2015 to 3,16,208 units in CY2020.

“In the end it boils down to choice,” Garg says. “Between 2016 and now, 8-9 new sub-4 metre SUVs/crossovers, as well as many premium hatchbacks, have been launched; consumers have a lot of choice.” He adds that SUVs, in general, are considered more premium than a sedan, and are better suited to India’s road conditions. “We are also seeing a jump in the number of female car buyers who are opting for SUVs,” he adds.

The five sub-4 metre sedan models available in India could be the last of such cars globally; currently, no carmaker is officially known to develop an all-new sub-4 metre sedan. “Even if a carmaker is developing one, it will have to re-evaluate its strategy or delay the product,” says Gaurav Vangaal, associate director, IHS Markit.

*Hyundai still sells the Xcent (now called the Xcent Prime) to fleet operators.
**Mahindra had also launched the Quanto and NuvoSport sub-4 metres SUVs last decade.

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