Summarize

Simplifying... Inshort

Despite a slowdown in India's auto industry, entry and midsize SUVs are gaining traction with a 65% and 6.3% sales increase respectively.
Meanwhile, high-end buyers are being drawn to MPVs, thanks to their innovative features and comfort, a trend seen not just in urban areas but also in tier 2 and 3 markets.
This shift in preference is attributed to changing travel styles and the need for more spacious vehicles.

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The overall car industry has also slowed, growing under 2% during April to August

Premium SUV sales in India decline by 18% this fiscal

By Dwaipayan Roy

Sep 25, 2024

11:39 am

What's the story

The Indian auto market has witnessed a significant decrease in the sales of premium SUVs, this fiscal year. High-end models such as the Hyundai Tucson, Toyota Fortuner, and Jeep Meridian have experienced an 18% drop in sales within the first five months. This trend indicates a shift in consumer preferences away from larger SUVs, priced above ₹20 lakh.

Industry slowdown

Overall auto industry growth slows down

The overall growth of the Indian auto industry has also slowed down this fiscal year, with a less than 2% increase to 1.75 million units sold from April to August. This contrasts with the previous two fiscal years when SUVs of all sizes drove a boom in local passenger vehicle sales, reaching a record high of 4.22 million units in FY24.

Market shift

Midsize SUVs gain popularity

Despite the overall slowdown, sales of entry and midsize SUV cars have seen a significant increase. Entry-level models have grown by 65%, while midsize models have seen a 6.3% rise in sales. Industry insiders suggest that this shift is due to the maturing market and consumers seeking more diverse options, with many opting for vehicles priced below ₹20 lakh.

Rising competition

MPVs lure buyers away from larger SUVs

At the higher end of the market, MPVs with innovative features are attracting buyers away from larger SUVs. Ravi Bhatia, President at automotive consultancy firm Jato Dynamics, noted a rise in demand for versatile and comfortable vehicles in the ₹20 lakh+ category, as urban professionals return to offices and intercity travel increases. This trend is particularly evident in the MPV segment.

Market expansion

MPV appeal extends beyond major urban centers

Sabari Manohar, the Vice President (Sales, Service, Used Car Business) at Toyota Kirloskar Motor (TKM), highlighted the appeal of MPVs due to their space, design elements, as well as comfort. He also noted a change in traveling styles as people now spend more time on the road. This shift is driving demand for more spacious and comfortable MPVs not just in major urban centers, but also in tier 2 and tier 3 markets.