SUVs Surge Ahead: A Redefined Indian Market

India's automotive scene is transforming as SUVs surpass hatchbacks in popularity, fueled by rising incomes and changing consumer aspirations. This shift marks a move toward premiumization, with major automakers like Mahindra & Mahindra altering their focus to meet the demand for larger, luxury models.

In a notable pivot within India's automobile sector, SUVs are eclipsing hatchbacks as the dominant choice among consumers, as detailed in the latest findings from SOIC Research. The report, 'Premiumisation: India's Next Consumption Wave,' reveals a consistent decline in hatchback market share over five years, reflecting a shift in the nation's transportation desires.

SUVs now constitute nearly 50% of passenger vehicle sales in the country, in stark contrast to the stagnating entry-level hatchback segment. Data indicates a robust upward trend for both entry and premium SUVs from FY2018-19 to FY2023-24, underscoring an industry-wide tilt towards more opulent vehicle options.

As industry leaders adjust to this trend, Mahindra & Mahindra has chosen to halt production of sedans and smaller vehicles. CEO Anish Shah stated the company's strategic focus on the SUV market aligns with consumer demand, echoing sentiments from Tata Motors' Shailesh Chandra, who noted significant growth driven by new and upgrading buyers.

The SOIC Research further illustrates this transition with hatchbacks facing a 17% sales decline in 2024 while SUV sales surged by 23%. With SUVs capturing a 52% market share, this marks the first significant hit to hatchbacks in two decades.

The report attributes the SUV's ascendancy to the push for premium products amid rising consumer disposable incomes and aspirations, influencing everything from vehicle aesthetics to ancillary markets. As this premiumization trend gains momentum, it is reshaping automaker strategies, with major players like Maruti Suzuki anticipating a further drift towards high-end models.

R.C. Bhargava, Chairman of Maruti Suzuki, acknowledges a potential cyclical return of smaller cars but affirms the long-term dominance of SUVs, which are redefining automotive consumer preferences across India. (ANI)

(With inputs from agencies.)