Sales of small SUVs such as Hyundai Motor India's Exter and Tata Motors' Punch, priced up to INR 10 lakh, are scorching the sales charts, rising 72% in the first four months of this fiscal, outpacing a 1.8% increase in domestic passenger vehicle sales.
As many as 175,330 small SUVs were sold between April and July 2024, up from 101,855 units in the same period last year, showed data from automotive consultancy firm Jato Dynamics. In fact, incremental sales of 73,475 units of these SUVs more than made up for a decline in sales totalling 69,936 units of small cars/hatchbacks in the same period.
Sales of small SUVs include those of Tata Punch and Hyundai Exter, and to a smaller extent, volumes of entry variants of compact models like Maruti Suzuki Brezza, Hyundai Venue and Tata Nexon.
Others are also joining this fast-growing segment.
Kia Motors is looking to launch Clavia, its first micro SUV model, while Hyundai is working on the Bayon compact SUV, which would be competing with Maruti Suzuki's popular Fronx model.
Volkswagen Group's Skoda, too, is set to introduce Kylaq, its first compact SUV, early next year.
The robust growth in small SUV sales has ballooned their share in vehicles priced up to INR 10 lakh by 11% during April-July 2024. This was at the expense of hatchbacks whose sales continued to slide, falling by 17% during the period.
Senior industry executives say various reasons are behind the shift.
Micro SUV sales up 86% till August in CY24
The rising aspirations of rural buyers and availability of affordable SUVs in the entry-level segment that are considered more versatile and spacious than hatchbacks and entry sedans are driving demand for small SUVs in the Indian market, the executives told ET.
"Micro SUVs have emerged as the fastest growing segment this year. At the same price points as hatchbacks, customers now have the choice of vehicles with SUV body-style like the Exter, which has 6 airbags as standard, sunroof and dashcam as segment first features. And they are preferring the latter for the versatility in usage that a SUV offers," said Tarun Garg, whole time director and chief operating officer at Hyundai, the country's second largest carmaker. Hyundai introduced the Exter in July 2023.
Rising micro SUV sales have boosted their share in total SUV segment sales to 13% between January and August 2024, up from 9.8% in CY2023. "The trend is particularly interesting given that there are only two models in the segment -- Hyundai Exter and Tata Punch. The potential has made even the market leader look into the segment," a senior industry executive said requesting anonymity.
Maruti Suzuki has started developing a micro SUV--positioned below its best-selling compact SUV Brezza--to take on Tata Punch and Hyundai Exter, people said. The vehicle is likely to go on sale in two years.
"Buyers today are aspirational, they want innovative and feature-rich products irrespective of the price point, be it sub-Rs 10 lakh or above; they are willing to pay for the car if they see value in it," said Garg.
Even on the broader base of the first eight months of 2024, micro SUV sales have surged 86%, compared to a 19% increase in total SUV segment sales.
Ravi Bhatia, president, Jato Dynamics, said while most vehicles with a boxy body-style are loosely labelled as SUVs, there is surely an increasing consumer shift towards them, and away from small hatches and sedans. "Consumers today prefer spacious cars with higher seating positions. In case of hatches, the design itself limits the space available within the vehicle. Whereas in sedans, the boot curtails the size of the interior of the vehicle. And given that today both these body styles come in the same price range, there is an affinity for the smaller SUVs among buyers," Bhatia said.
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