Compact sedan market faces decline due to rise of affordable SUVs as the UV segment has grown by 40 percent in H1 FY 2016
Compact sedans have been doing well until compact SUVs came and heated the segment hard. yes, the sub-4 meter compact sedan sales in Indian market has declined to its worse, as the rise in the sales of compact SUV has grown rapidly. With almost every other automaker is producing compact SUVs, customers are upgrading to compact SUVs and crossovers directly from hatchbacks instead of upgrading to compact sedans.
The UV segment has grown by 40% in H1 FY 2016, which is largely attributed to compact SUV sales. The tough looking crossovers and compact SUV’s has created a sensation in Indian market in recent times, and also established a new buying trend. The small hatchback owners, who earlier used to upgrade to affordable compact sedans, now opting toward either premium hatchbacks or compact SUVs as well, which have become pretty much affordable.
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Speaking about the new trend, Mr. Mayank Pareek, President of Passenger Vehicles Business Unit, Tata Motors has said that, Indian auto industry has showed 12.2% growth in H1 of FY2016, but there are huge variations in the segments. Sedan segment has slumped by 13.3%, and the declination is largely due to the lowered number of sub-4 meter compact sedan sales.
In Indian sedan segment total sales volume has decreased to 2,77,499 units in H1 FY2016, compared to 3,20,257 units in H1 FY2015. There a total of 33 models in the segment and only three models have seen success which are Maruti Suzuki Ciaz, Ford Aspire and Hyundai Xcent. Honda’s City and Amaze, two popular sedans in India has seen decreasing sales number.
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The automakers blame several reasons behind this trend. While on is increased affordability of premium hatchbacks and compact SUVs, other one is fleet demand shift. compact sedans like Maruti Suzuki Swift Dzire, Honda Amaze, which have been pretty popular has suddenly experienced tough competition from premium hatchbacks like Maruti Suzuki Baleno, Hyundai Elite i20, Honda Jazz etc. In the compact SUV also, several models has impacted sedan’s sales.
Source: ET Auto