India SUV Market Demand is Increasing Rapidly in Recent Years

Sports Utility Vehicles (SUVs) assume a new meaning in India. In a country, where vehicles and their cost is deeply steeped into the notions of power and affluence, more Indians are shunning humble hatchbacks and gentlemanly sedans to opt for the ferocious, on-your-face SUVs. This new-found love for power and prestige has the Society of Indian Automobile Manufacturers smiling, as the segment (UVs) grew a staggering 30% in FY 2016-17. To put this in perspective, the passenger vehicle (PV) segment grew at 9.23% in the same period.

It will be a mistake to tag the growing preference for UVs as a passing fad. Going by the frantic demand and anticipated product launches, more Indians will be driving an SUV or MUV by 2020. By 2027, SUVs may be as ubiquitous as the good ol’ Maruti Suzuki 800 or the Ambassador (for a long time, these were the only two cars available to buyers). It is expected that SUV sales will continue to grow at a strong rate in the next decade, as India moves ahead to become part of the global automotive triumvirate or the Big 3.

What’s Driving the SUV Frenzy in India?

Off-roading is still a nascent concept in India, with few adventurists venturing into the less-trodden paths. SUV sales in India are not influenced by the desire to go off-roading on weekends. Instead, it is a confluence of numerous underlying factors that has sparked a new breed of SUV fanboys in India.

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For a long time, only two SUVs dominated the Indian landscape – Mahindra & Mahindra’s Scorpio and Tata Motors India’s Safari. These vehicles symbolised raw power and authority, but the Indian middle class shied away from these as these heavyweights lacked that suave sophistication that many hatchbacks and sedans offered. There were other high-end cars in the upwards of Rs. 20,00,000 (US$ 30990); however, they were out of reach for majority of buyers.

In the absence of an attractive offering, sedans and hatchbacks remained the preferred option for Indian carbuyers. The watershed moment in the Indian SUV market (compact SUV market to be more precise) came when Renault launched its compact SUV Duster in the Indian market. The car was made predominantly for European markets, but due to attractive price positioning and subtle marketing campaign, it caught the imagination of an entire nation.

Renault did not market Duster as an off-road vehicle, but positioned it as a smarter buy than a sedan. The car saw unprecedented sales, but most importantly it spawned a new era in the Indian auto market. The success led to the launch of a number of compact SUVs, most notably, Ford Ecosport, Nissan Terrano, Mahindra XUV 500, Hyundai Creta, and Maruti Suzuki Vitara Brezza.

In addition to the strong social and cultural quotient, space and durability are the other key factors driving SUV sales in India. Unlike the west, a significant percentage of Indians live together with their parents, a structure which is colloquially known as a ‘joint family’. For millions of such households, a 7-seater SUV is a pragmatic option – although it has to be mentioned that majority of compact SUVs only seat 5 people. Toyota Innova Crysta, Mahindra XUV 500, Mahindra Scorpio, Maruti Suzuki Ertiga, and the recently launched Tata Hexa are the favourites among this demographic.

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The Future of SUVs in India

The India SUV market is anticipated to grow at a staggering growth rates in the next decade. As more people make the transition from an entry-level car to a compact SUV, sales are expected to remain healthy. Further, many prospective Indian buyers are today more inclined to buy an SUV vis-à-vis hatchback, which will also contribute to the growth of this market.

According to the Society of Indian Automobile Manufacturers, SUVs have grown from being 12.59% of India’s PV segment in 2010-11 to 25.01% in 2016-2017. It is projected that in the next decade, SUVs may account for nearly 40% of India’s PV segment.

Competitive Landscape

The leading automakers in the India SUV market include Renault India, Maruti Suzuki, Hyundai Motor India Limited, Toyota Kirloskar Motor, Nissan Motor India Private Limited, Honda Cars India, Ford India Private Limited, Tata Motors, Mahindra & Mahindra, Mitsubishi India, Mercedes-Benz India, and Audi India.

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