The year of the SUV: When Indian automakers started riding higher

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In 2023, SUVs (sports utility vehicles), though shrunk from their original avatars, came to rule India’s auto market. The number of SUV launches hit a new high this calendar year at 108, reaching the three-figure mark for the first time.

The craze for SUVs can be gauged from the fact that they overtook all other types of cars. In the overall passenger vehicle segment, there have been fewer launches in 2023 than in the pre-pandemic 2019 of hatchbacks and sedans, data collated by automotive market research firm Jato Dynamics shows. Only 47 new sedan models hit the road this year (till October end) against 62 in 2019 while the number of hatchback launches more than halved to 21 from 48. October was the tenth straight month that monthly sales of passenger vehicles have breached the best-ever mark this year, driven by demand for SUVs, which comprised half of all passenger vehicles sold in the country.


The rise of the SUV

Suddenly, more Indians are buying SUVs than hatchbacks and sedans, something not foreseen a few years ago in a market defined by small cars. SUVs have doubled their market share in five years.

SUVs have seen a four-fold increase in their share among first-time buyers in the country over the past decade as a growing number of Indians flocked to the four-wheelers with higher ground clearance amid improved affordability and a wider choice offered by automobile manufacturers, ET has reported.

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.

Why Indians have started preferring SUVs

With their dominating road presence, high ground clearance, bulky look, more room inside and additional features, SUVs are winning hearts of those who were earlier fixated on hatchbacks and then upgraded to sedans. Indian city roads with potholes and numerous speed-breakers as well as contingencies such as floods make SUV a preferred vehicle.The form factor works brilliantly in Indian conditions, and automobile manufacturers have transformed their product portfolios to feed an explosion of demand. They have reconfigured SUVs for urban mobility, while retaining the form as buyers seek comfort and stature. They have also made the smart move by jettisoning most off-roading capabilities to make this class of vehicles more affordable. The roomier vehicles have a special value proposition in India where cars carry more people than in other countries. The higher driving position and bigger ground clearance also work better on road conditions that are deteriorating as the vehicle population rises.

The shift in consumer preference away from low-slung sedans is aided by overlapping price segments as SUVs shrink and lose their all-terrain, or even crossover, functionality. New vehicle safety requirements have made entry-level hatchbacks more expensive, and the buyer has room to stretch mildly to fulfil an aspiration for road presence. Car makers are de-prioritising premium hatchbacks and entry-level sedans, particularly when it is relatively easy to graft engines and drivetrains from these segments on to compact and mid-sized SUVs. Most of these ‘sports utility vehicles’ don’t conform to the ladder-on-frame design that off-roading purists seek. It’s relatively easy to roll out taller versions from existing hatchback and sedan line-ups.

The rise of the SUV and the fall of the small car is not just about bigger aspirations of young Indian consumers. Stress at the lower-end of customers and premiumisation as well as easy access to credit in the middle customer segment have forced carmakers to focus on SUVs instead of smaller cars. That’s why there are only about 13 hatchback models currently being sold in the Indian market, as against 12 SUVs each in the entry and midsize segments.

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