On the face of it, the midsize seven-seater SUV space looks like shrinking. For instance, in CY2017, this sub-segment of SUVs had four models (Mahindra XUV 500 and Scorpio, and Tata Hexa and Safari), with sales of 96,539 units. In CY2020, this sub-segment had shrunk to 43,678 units, despite the addition of MG Hector Plus.
But, analysts are of the opinion that this sub-segment will pick up in a big way this year, with Tata Motors having launched the new Safari earlier this year, followed by Hyundai Alcazar (likely later this month) and Mahindra XUV 700 (later this year).
Som Kapoor, partner, automotive sector, EY India, said that midsize seven-seater SUVs are the new frontier. This space, roughly in the Rs 15-25 lakh segment, is currently dominated by an MPV, the Toyota Innova Crysta.
“But then there are a lot of families in India that have two parents and two kids, plus a driver, and they are keenly looking at an SUV, a midsize seven-seater SUV,” he said
Another analyst on the condition of anonymity added that the decade of the 2010s was when midsize five-seater SUVs became really popular. “Right now, in India, there could be over 10 lakh existing customers of SUVs such as Renault Duster, Hyundai Creta and Kia Seltos (Rs 10-20 lakh space). And now they want to upgrade. Unfortunately, the next big SUV for them is either Toyota Fortuner or Ford Endeavour or Hyundai Tucson (full-size SUVs in the Rs 25-40 lakh range). That’s where midsize seven-seater SUVs fit in,” he said.
When asked why many such customers didn’t upgrade to the existing crop, such as the XUV 500, he said, “Indians are very brand conscious. The Creta, for example, alone has an existing customer base of over 6 lakh units. The Creta customer, most likely, will upgrade to a bigger Hyundai. But with the Tucson far more expensive, she is upgrading to a more expensive variant of the Creta. Hyundai knows this, and that’s why it has developed the Alcazar”.
Preetam Mohan Singh, senior vice-president, automotive, Praxis Global Alliance, said that the midsize sedan segment (Maruti Suzuki Ciaz, Hyundai Verna, Honda City, Toyota Yaris) is contracting, and the prospective buyers of such cars are expected to shift to midsize seven-seater SUVs. “A 25-35 year old, working in corporate India, would any day consider a midsize seven-seater SUV over a midsize sedan, especially considering the fact that the price difference between the two isn’t substantial,” Singh said. “With seven seats, it’s a vehicle for family. It’s a prestige issue. And it’s not expensive.”
Gaurav Vangaal, associate director, IHS Markit, added that with bigger players such as Hyundai entering this space (and the Safari off to a flying start), it will expand. “Next year it’s likely that Maruti Suzuki will enter the midsize six and seven-seat SUV space (and a co-badged product with Toyota), and that will really open up this space,” Vangaal added.
Most analysts argue that spending more time together as a family has been one of the positives from Covid-19 restrictions. As India gets back on the road, for travel, for road trips, a lot of people would like to be with family. More and more seven-seater SUVs in the price range of Rs 15-25 lakh means a lot of families will shift to such vehicles from sedans and five-seater SUVs, analysts say.