Utility Vehicles Overtake Hatchbacks

Utility vehicles have overtaken hatchbacks in sales in the past year, becoming the top-selling segment in India’s automotive market for the first time.

Within utility vehicles, SUVs accounted for about eight out of 10 units sold. With over 65% growth in SUV sales in 2021, India has also likely become the third-biggest market for SUVs in the world, going a position higher by overtaking Japan, according to industry estimates.

In the year gone by, close to 1. 42 million utility vehicles were estimated to have been sold in India, compared with about 1. 23 million hatchbacks.

In 2020, hatchback sales had topped SUVs at 1. 14 million to 900,000. The share of utility vehicles is projected to have grown to 46% in 2021 from 37% the year before, whereas for hatchbacks, it has likely shrunk to 40% from 47%.

SUVs alone have accounted for about 1.18 million units in 2021, show industry figures. Japan is likely to have sold about a million units.

Growing demand for SUVs is a global trend and India is just following that, say industry analysts. For the Indian buyer, attractive finance schemes, low interest rates and models available at many price points are helping satiate the penchant towards the sportier and more premium vehicles compared with the no-frills hatchbacks.

"The Indian consumer has rapidly followed the global trend and made the Indian market an SUV market," said Gaurav Vangaal, associate director at automotive consultancy firm IHS Markit.

He expects utility vehicles to remain the biggest segment in the market going ahead.

Automakers are also actively promoting SUV sales, as the margins are higher than hatchbacks. Sales would have been higher but for a global shortage of semiconductors, which has affected the production of SUVs and other feature-rich vehicles more than entry-level cars. Shashank Srivastava, senior executive director at Maruti Suzuki, said the SUV segment has been expanding over the last five years, especially the compact SUV segment where the company’s Brezza is the market leader. "This year (2021), the compact SUV segment is almost 22% of the market," he added.

"While overall the design preference for SUVish vehicles has grown, the other major reason is that the price overlap with sedans and premium hatchbacks has increased the cross consideration for the SUVs," he said.

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