The domestic passenger vehicle market is undergoing a major change in terms of consumer preferences. The sub-4 metre compact SUVs are taking the place of sub-4 metre premium hatchbacks in becoming the vehicle of choice for most customers.
As per available data, compact SUVs have become the largest segment within the passenger vehicle (PV) space, constituting almost 22% sales share in FY22 (up from a meagre 5% in FY16), overtaking the premium hatchback segment (21% in FY22).From FY16 to FY22, the sales share of premium hatchbacks has remained in the range of 22-24%, but dropped to 21% in FY22.
Compact SUVs, however, have grown from 5% in FY16 to 8% in FY17, 11% in FY18, 11% in FY19, 13% in FY20, 16% in FY21, and 22% in FY22.
Automotive analysts FE spoke with said compact SUVs have crowded out premium hatchbacks. While there are five premium hatchbacks in India (Maruti Suzuki Baleno, Tata Altroz, Hyundai i20, Honda Jazz and Toyota Glanza), as many as nine compact SUV models are offered by eight carmakers (Maruti Suzuki Brezza, Tata Nexon, Hyundai Venue, Kia Sonet, Mahindra XUV300, Toyota Urban Cruiser, Nissan Magnite, Renault Kiger and Tata Punch).
“Among compact SUVs, only the Baleno, Altroz and i20 are big sellers, because these have a novelty factor (in 2020, the Altroz and the new generation of the i20 were launched, and in 2022 the new-gen Baleno arrived), but among compact SUVs almost all models have a novelty factor — as most were launched 2019 onwards, barring the Nexon and Brezza —and most are big sellers,” said an analyst.
“Be it the Nexon, the Brezza or the Magnite or Kiger, these are respective carmakers’ highest-selling single models.”Gaurav Vangaal, associate director, light vehicle forecasting, S&P Global Mobility, told FE that the sheer choice buyers get in terms of models veers many a people towards compact SUVs.
Saket Mehra, partner & auto sector leader, Grant Thornton Bharat, told FE that entry-level prices for hatchbacks are facing an added pressure, owing to second phases of CAFE (corporate average fuel efficiency) and BS-VI emission norms, as well as updated safety standards for airbags. “From a cost perspective, entry-level compact SUVs (which account for 60% of gross SUV sales) have become a close alternative for premium hatchbacks.
SUVs hold a higher status symbol in the Indian market (vis-à-vis hatchbacks) and are more conducive for Indian roads, making them a more attractive option,” Mehra said. “Overall, the SUV segment is experiencing growth—both in sales figures as well as in new models being launched in the market.
”Then there is a slight difference in the driving experience that is making buyers consider compact SUVs increasingly. Shashank Srivastava, senior executive director, marketing & sales, Maruti Suzuki India, told FE that buyers prefer compact SUVs because these offer upright driving stance and high ground clearance, making these more suitable to drive than other body types on Indian road conditions. “But the most significant factor is the price point — compact SUVs are priced more or less in the same range as some premium hatchbacks, and offer good ride, comfort and road presence,” he said.