Commercial vehicles overtake hatchbacks, Auto News, ET Auto
Bombay:Commercial vehicles have overtaken hatchback sales over the past year, becoming the top-selling segment in the Indian automotive market for the first time.
Within commercial vehicles, SUVs accounted for around eight out of 10 units sold. With more than 65% growth in SUV sales in 2021, India has also likely become the third largest SUV market in the world, taking a higher position by overtaking Japan, according to industry estimates.
In the past year, nearly 1.42 million commercial vehicles were reportedly sold in India, compared to around 1.23 million hatchbacks.
In 2020, hatchback sales had exceeded SUV sales by 1.14 million to 900,000. The share of commercial vehicles is expected to reach 46% in 2021, compared to 37% the previous year, while for cars with hatchback, it probably went from 47% to 40%.
Spin: Global trend, analysts say
SUVs alone accounted for around 1.18 million units in 2021, according to industry figures. Japan is likely to have sold around a million units.
The growing demand for SUVs is a global trend and India is only following this, according to industry analysts. For the Indian buyer, attractive finance programs, low interest rates, and models available at numerous prices help to quench the penchant for sportier, higher-end vehicles over no-frills sedans.
“The Indian consumer quickly followed the global trend and turned the Indian market into an SUV market,” said Gaurav Vangaal, managing partner of automotive consultancy IHS Markit. He expects commercial vehicles to remain the most important segment of the market in the future.
Auto makers are also actively promoting SUV sales, as the margins are higher than hatchbacks. Sales would have been higher without a global semiconductor shortage, which has affected the production of SUVs and other feature-rich vehicles more than entry-level cars.
Shashank Srivastava, senior executive director of Maruti Suzuki, said the SUV segment has grown over the past five years, especially the compact SUV segment where the company’s Brezza is the market leader. “This year (2021), the compact SUV segment represents almost 22% of the market,” he added. “While overall the design preference for SUV vehicles has increased, the other main reason is that the price overlap with sedans and high-end sedans has increased the cross-consideration for SUVs,” said he declared.
According to the IHS Markit Light Vehicle Production Analysis, India’s production of sedans and sedans has been declining since 2014, even while that of SUVs has increased.
Vangaal expects the SUV market to grow at a compound annual rate of 9% between 2021 and 2025, faster than the 3.7% growth estimated for sedans.
Consumers are also spoiled for choice in the SUV space, with at least 93 models available with prices starting as low as Rs 5.5 lakh.
No less than 46 new SUVs have hit the roads in the past three to four years, more than sedans (24) and sedans (16) combined. Even in the years to come, new SUV launches will continue to drive the market. Nine SUV launches are slated for 2022, according to automotive consultancy Jato Dynamics India.
VG Ramakrishnan, managing director of consultancy firm Avanteum Advisors, said the lack of options in spacious sedans for families to travel together is also one of the reasons for the growing demand for SUVs and other utility vehicles.
“With Covid, driving will become preferred for shorter distances compared to trains,” he said. SUVs will continue to be the dominant segment. “