About a third of first-time car buyers in the Indian market now drive home an SUV compared to less than a tenth a decade ago, when hatchbacks ruled the country’s roads, according to industry data. The share of additional and replacement buying in the category during this period has fallen to 69% from a whopping 92% in 2014.
“There is not only an increased preference for the body type, with the introduction of more compact models there is a price overlap between entry SUVs. Entry SUVs accounted for 22% of sales in the overall market (in 2022-23), up from 1% in 2014,” said Shashank Srivastava, senior executive officer (marketing and sales) at market leader Maruti Suzuki. “This sharp shift in consumer preference has made the carmaker change gears and introduce a slew of models in the segment – Brezza, Grand Vitara, Fronx, Jimny – in the past one year to expand volumes and market share.”
While first-time buyers for compact SUVs like Hyundai Venue account for 40% of the sales of the model, the numbers for mid-sized vehicles such as Maruti Suzuki Grand Vitara and Hyundai Creta stand at 21% and 26% respectively. The proportion of first-time buyers for Maruti Suzuki Brezza stands at 23%. The ratio is higher, at about 30%, for the newly launched Fronx.
The transformation of SUVs themselves – once known for their ruggedness and off-roading capabilities to vehicles more suited for city driving – has also triggered this shift in customer set in overall sales, senior industry executives and brand consultants told ET.”SUVs represent a combination of stature and performance. So much of car buying is about self-image – who you are, where you’ve reached. The higher road presence psychologically signals value,” said Santosh Desai, chief executive officer, Futurebrands. While sedans, with their long body type symbolised luxury a few years ago, once carmakers introduced more compact models in the SUV segment at affordable price points and started adding comfortable strappings for city drives, demand exploded for SUVs, said Desai. “Consumers rarely use them for off-roading now. They are meant for driving in and around the city. And this aspiration (for SUVs) cuts across geographies,” he said.
In the broader industry, the popularity of SUVs has been on rise for some time now, but the past three years have seen a sharp increase in demand. In the first quarter of this financial year, the segment accounted for 47% of the total passenger vehicle sales, up from 22% in the corresponding quarter of 2018-19. In July, the share of SUVs went up further to 49%. In comparison, hatchbacks accounted for 32% of passenger vehicle sales and sedans about 9%.
For some manufacturers, SUVs already account for more than half their business.
“SUVs continue to be an extremely strong growth driver for the company, contributing to nearly 60% of our total sales against the Industry contribution of 46-47%,” said Tarun Garg, chief operating officer, Hyundai Motor India. “The percentage of first-time buyers preferring SUVs continues to go up and now close to 40% of our Venue customers are first-time buyers. For Creta, first-time buyers account for a healthy 26%.”
The company’s recently launched SUV, Exeter, has already received 60,000 bookings from customers, said Garg.
SUV sales in India are projected to increase 19% to 1.9 million in this fiscal from 1.67 million in 2022-23.