Hot hatches fire up Indian car market

The popularity of the premium hatchback appears to have been among the big drivers of the jump in car sales this year.

By: | Updated: March 19, 2016 7:49 PM

The boom in sales of premium hatchbacks started with the revamped version of the i20, called the i20 Elite, from the Hyundai stable, which sold 61,878 units in FY14. (Reuters)

The boom in sales of premium hatchbacks started with the revamped version of the i20, called the i20 Elite, from the Hyundai stable, which sold 61,878 units in FY14. (Reuters)

The popularity of the premium hatchback appears to have been among the big drivers of the jump in car sales this year. While hatchbacks as a segment contribute 55% of total car sales, premium hatchbacks constitute 17% of the hatchback segment. A year ago, however, they contributed just 8%. Crisil Research estimates the share of premium hatchbacks as a percentage of total hatchbacks could go up to more than 20% in 2016. IHS Automotive estimates the share could be higher at 25%.

Kumar Kandaswamy, partner, Deloitte, points out that premium hatchbacks have become popular because customers are travelling across cities more frequently and are, therefore, concerned about safety features. “These cars come with airbags and automatic transmissions which makes them a popular choice,” Kandaswamy said.

A third of the buyers for these models are first-time buyers, according to R Raghuttama Rao, managing director, IMaCS, a subsidiary of ICRA. These vehicles are bigger than mini and pure-play hatchbacks but a tad smaller and 10-15% cheaper than compact sedans. They offer similar features as compact sedans do and have been a hit with consumers, so much so that virtually every manufacturers has an offering in the space. The most popular models are Hyundai's i20, Honda's Jazz and Maruti Suzuki's Baleno.

The boom in sales of premium hatchbacks started with the revamped version of the i20, called the i20 Elite, from the Hyundai stable, which sold 61,878 units in FY14. In FY15 so far, sales have hit 88,395 units, boosting Hyundai's business.

Similarly, Maruti Suzuki's premium hatchback Baleno has been popular, forcing the company to ramp up production. Since its relaunch in June, Honda's Jazz has also sold 24,072 units.

According to Ajay Srinivasan, director, Crisil Research, although premium hatchbacks are 10-15% less expensive than compact sedans, they offer almost the same features. “Hatchbacks on the other hand have suffered because aspirations have risen and premium hatchbacks are priced competitively,” Srinivasan added.

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