Indians are in love with their SUVs and MUVs.
After years of obsessing over small vehicles, car-makers in Asia’s third-largest economy are turning to the bigger and brawnier sports utility vehicles (SUVs) and multi-utility vehicles (MUVs). Over the past five years, their sales have ballooned, accounting for one in every four passenger vehicles sold by India’s $74-billion automobile industry.
In 2010, utility vehicles (UV) constituted just about 14% of the overall passenger vehicle sales. Today, they account for over 25%, the latest data from industry body Society of Indian Automobile Manufacturers (SIAM) shows.
In fiscal 2017, over 21 million vehicles were sold in India, of which more than three million were cars. Of this three million, over 700,000 were utility vehicles. That is 30% more than last year’s figure, even though car sales itself grew only by over 4%. In fiscal 2018, the SIAM expects a 7-9% growth in vehicle sales.
Much of the recent boom in UV sales has been led by SUVs such as the Maruti Suzuki Vitara Brezza, Toyota Fortuner, Ford Ecosport, Renault Duster, and MUVs like the Toyota Innova.
Affordability and comfort
“There are two elements to the success of utility vehicles, particularly SUVs,” Abdul Majeed, a partner at consultancy firm PwC, said. “SUVs, especially compact SUVs, have become affordable for the Indian consumer. Secondly, there has been a conscious effort from the automakers to launch more SUV models in the country.”
Indeed, over the past few years, companies have been regularly launching a variety of UVs, particularly in the compact SUV segment. On April 11, American carmaker Jeep launched what is its cheapest model in India, the Compass. While Jeep’s Wrangler and Cherokee cost over Rs50 lakh ($77,304) and Rs1 crore ($154,609) respectively, Compass is expected to be priced at less than Rs20 lakh ($30,000).
Jeep’s latest launch comes at a time when other global carmakers such as Honda, Hyundai, and Ford have been developing new compact SUVs specifically for the Indian market. In March, Honda launched the WR-V, a compact SUV jointly developed by its research teams in India and Japan. This year will also see Volkswagen and Skoda launching new SUVs in the country.
The auto-makers are tweaking designs and bringing innovations that suit Indian conditions.
“The shape of the SUV is changing,” Deepesh Rathore, director at Gurgaon-based Emerging Markets Automotive Advisors (EMMAAA), said. “Older models like the Scorpio and Safari use a traditional body-on-frame construction, which, though rugged, ends up being bulky and not too comfortable. Their fuel economy is also dismal. The modern SUV is a crossover and has characteristics closely matching a car with the stance of an SUV. This makes the machines comfortable for urban driving and also results in higher fuel economy. Its a win-win for the customer and that has resulted in booming sales.”
EMMAAA now expects compact SUVs to emerge as the second-biggest segment in the Indian market. “A change in customer behaviour is often a long-term phenomenon,” added Rathore. “I don’t see the trend fading anytime soon.”