Key highlights:

  • More first-time buyers are choosing to buy second-hand compact hatchbacks
  • They upgrade to mid-size sedans, compact SUVs or premium hatchbacks
  • Overall market share of SUVs in India's passenger vehicle market has increased to about 27% from 14% five years ago

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The 'premiumisation' factor seems to be catching up in India's largely 'small-car' market. 

Customers today seem to be upgrading to larger more expensive cars such as SUVs, mid-size sedans and premium hatchback. 

Overall market share of SUVs in India's passenger vehicle market has increased to about 27% currently from around 14% five years back, according to a recent HSBC report. The mini segment, on the other hand, is only 28% market share, down from 45% in FY09.

ALSO READ: Big ticket cars, bikes setting the pace of growth for automobile firms

Majority of car companies post good growth in sales May

The report further forecasts the slow end to the dominance of the mid-size sedans with mid-size SUVs gaining popularity. “Mid-size sedans, those below 4m in length, benefit from lower excise duty. The segment has been an extraordinary performer, led by the iconic Maruti Dzire. But we think the popularity of mid-size SUVs (with similar taxes), with their similar price range and handling, is a threat and buyers are upgrading from mid-size Sedans to mid-size SUVs,” the report said.

Source: HSBC Global Research Indian Autos report

With the launch of new models, the SUV market has rebounded strongly after underperforming car sales over the past few quarters. SUVs account for around 26-27% of the total passenger vehicle market, it adds.

Premium hatchbacks have also gained shares from mid-size hatchbacks and also cannibalised some sales from mid-size sedans, in our view.