The Indian automotive market has been traditionally known for selling hatchbacks and small cars in big quantities but it has changed in recent years. Some of the glaring reasons are consistent increases in car and fuel prices, more stringent emission standards leading to the lack of availability of diesel powertrains and an overall improved standard of living.
The domestic market has transformed from a volume-based affordable car space to a more premium avenue where spending between Rs. 10 lakh and Rs. 15 lakh has become customary. This price bracket sees the domination of compact and midsize SUVs due to better practicality (higher ground clearance and bootspace).
Under the significance of these two segments, car manufacturers have poured all in in recent years and resultantly, you could find plenty of VFM offerings with more advanced features list than the ones found in hatchbacks or MPVs. The market share of SUVs in the sub 10 lakh to over 1 crore space has gone past 50 per cent for the first time last FY.
Compared to four years ago, the sales numbers have doubled. One of every four cars sold in India were hatchbacks in the past but now their market share slumped to 28 per cent. The often increasing prices of the entry-level hatchbacks are another factor – up by 65 per cent within the last few years.
The dominance of SUVs is here to stay over the next few years as both compact and midsize SUVs will be strengthened with the arrival of new models. In addition, carmakers will bring in new electric vehicles in these categories as part of the transition towards electrification, which is relatively slow compared to several international markets.
It is a blessing in disguise for many global brands as the sales of EVs have almost flattened in the developed countries whereas India is thriving with ICE models’ sales. Companies competing in the regular and luxury segments are pumping in fresh money to introduce new SUVs and thus the segment will only evolve into the future.
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