Despite an SUV onslaught, hatchbacks continue to rule the roost: Maruti Suzuki

As the automobile industry gradually recovers from the global pandemic, the top-selling vehicles continue to be hatchbacks, while the demand for SUVs surges ahead at the expense of the sedan market.

India has seen a surge of SUVs in the last couple of years, yet the hatchbacks have managed to hold their own and continue to be the top three selling cars in the country. Despite Maruti Suzuki WagonR taking the top honours, December 2021 saw three sub-4 metre SUVs enter the top ten best-selling list. In an interview with Express Mobility, Shashank Srivastava, Senior Director, Sales and Marketing, Maruti Suzuki India explains why the hatchback segment remains the bread-and-butter of the automobile sector and what are the reasons behind the rapid growth of SUVs.

We have witnessed the growth of the SUV segment by leaps and bounds in the last 5-6 years now? Why is it trending so much?

There are a couple of reasons why SUVs are doing so well. The first is purely based on the economy. The cost of acquisition, especially the entry-level SUVs, has come down due to GST concessions they enjoy as they are less than 4 metres in length. There’s also a price overlap between the premium hatchbacks, the entry-level sedans and the compact SUVs and this means that there’s cross consideration and more choices for the customer. The entry-level SUV has a market share of 22% which translates into more than 50% of the SUV market. This SUV segment has come a long from just 4-5% in 2016 to 21-22% this year.

The other point is the preference of design and in that respect, this is a global phenomenon. Across the globe, if you look at Latin America, Europe or China, the US, the preference for SUV-ish type of design has increased. The SUV styling means a tall driving stance, a more upright and sheer road presence, higher ground clearance, larger tyres and the flexibility and maximization of space they offer are the main reasons why the SUV body type design is preferred across the globe and India is no different in that respect.

There’s a misconception that the demand for SUVs is growing at the cost of the hatchbacks. The reality is that this segment may not have grown as we have seen earlier, but it hasn’t shrunk either.

Yes, the statistics point this out. The first thing that is very clear is that the overall percentage of the SUV market has grown from 22-23% five years back to 32% in the last financial year.

Now if you look at the period from 2014 onwards, the total percentage of the hatchbacks at that time was around 47% of the total market and it has remained in that region for the last seven years. While it’s not grown in terms of percentage, but if you look at 2020-21, the hatchbacks still form 46% of the total market share. So, the gain in SUVs hasn’t affected the hatches as they continue to hold a larger market share. The sedans have taken a massive hit as five or six years ago, they held 23-24% of the market share, which has now trickled down to 9% for this calendar year and around 10.5% for the current financial year.  

The other thing that’s observed in the Indian market is that around 48-50% of first-time buyers opt for a hatchback and this is due to the young demography of the country. As the economy is growing, we are seeing many people starting their careers and this has been the trend for the last 20-22 years. Also, the preference for hatchbacks for first-time buyers has remained in the 58-60% mark for the last six to seven years.

The hatchback segment is divided into two parts —the entry-level and the premium class. Do you see a trend where first time buyers are graduating to the sub-4 metre SUV segment skipping the premium hatchbacks?

We have seen an increase in first time SUV buyers. Earlier, it was only 5-10%. On premium hatchbacks, in terms of percentage, around 50% are first time buyers and when you look at the entire hatchback segment as a whole, again 50% constitutes the premium hatches. This has been the story for the last 10 years. In 2011, the premium hatchbacks were also around 22-23% of the overall market and 50% of the hatchback market. So, 46% of the hatchback market share is evenly divided between entry-level and premium cars.

What is Maruti Suzuki’s plans in increasing its SUV range in India?

One of the objectives of Maruti Suzuki is to capture 50% of the market in India and we have managed to do so in the last four years in the retail passenger market and we would obviously like that to continue. To maintain this, we need to dominate across all large segments and if we see the hatches, which is the largest share, we have around 66% of the market share, in the MPV segment, Maruti’s market share is 64% and in vans, it is 96%. Other than the SUV market, we have a market share of 65%. However, when you include SUVs then the market share falls down to just under 50% and this year is slightly less than that. So, it’s obvious that we need to dominate the SUV market to dominate the entire market. The SUV market is quite big as it was 39% in this calendar year while in the financial year it was 32%. Clearly, we need to strengthen our SUV portfolio, but in the entry-level segment, the Vitara Brezza remains the market leader ever since it was introduced in 2016. Today the SUV market consists of 43 brands in India and Maruti has only two, the S-Cross and the Vitara Brezza, which is insufficient. We need to strengthen that segment and that’s what we hope to do in the future.

In this day and age, it’s all about platform sharing. Will we see a platform shared by both a hatchback and an SUV?

Yes, it’s very much possible. Globally, we do use this concept for cost optimization as we have modular platforms, which basically means we use carbon platforms and body types.  

Ever since BS6 emission norms kicked in many manufacturers, including Maruti Suzuki, have stopped rolling out diesel-powered vehicles. Do you see this affecting the SUV segment as traditionally SUV buyers prefer diesel over petrol or it’s just a matter of change in mindset?

For starters, the diesel market has shrunk dramatically. From the highs of 60% of the market share seven or eight years ago, it’s down to 18%, similar to last year. What becomes more interesting is when you start doing segment-wise analysis like for example in hatchbacks, it’s only around 1% and diesel’s overall passenger vehicle market share is only 2%. Yes, entry-level SUV has a share of 20%, but it remains to do better in the mid SUV category. The reason for this is that the customers aren’t looking at the economics rather they want an engine with more torque. The main reason why the demand for diesel vehicles has gone down is that the cost between diesel and petrol has become roughly similar. Even the cost of running a petrol and diesel vehicle is similar around ₹5.10 while in the case of a CNG vehicle, it is almost one-third of that cost. In most states, the average price gap between petrol and diesel is roughly ₹4-5 while in Gujarat, Jharkhand, Odisha and Goa, the prices of both the fuels are similar. Now it doesn’t make any economic sense to opt for a diesel car as even the cost of acquisition has gone up after BS6. Earlier, the cost difference of similar spec petrol and diesel vehicle was around a lakh, but now it has gone up to ₹1.50-1.75 lakhs. With the Real Driving Emissions (RDE) norms expected to kick in next year, the price gap will increase further and consumption of diesel vehicles will further come down. That is why we have said that currently, we won’t be entering the diesel market. On the CNG aspect, which is an alternate fuel option, we have seen tremendous growth and we have managed to replace our diesel volumes with CNG vehicles.

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