Latest Auto market trend in India – Sales of premium hatchbacks and compact SUVs are strongly rising

Mercedes - Benz Customer Engagement Initiative ,Luxe Drive 2017
Mercedes - Benz Customer Engagement Initiative ,Luxe Drive 2017

If fashion has taught us anything, its that trends are ever-shifting. What was popular yesterday may not be so today, but it could be tomorrow. There’s no way to know what becomes popular and when which is a huge problem for companies and market analysts. One can only know what’s working today, and try to jump into that bandwagon themselves.

Car sales in India are slowing down and are expected to stay that way all throughout 2019. January 2019 registered a total sale of 235295 units. This, however, is a marginal rise from December 2018, when 214783 units were sold. Still, 2019 has a lot of auto manufacturers worried.

Consequently, some good inexpensive cars have been reporting bad sales. Honda has discontinued its cheapest offering in India, the Brio hatchback. Volkswagen might do the same for its Ameo sedan. Both companies will now focus on their more premium offerings.

Fiat, a brand which only sold budget cars in India, had to shut their operations due to piling losses. Same for GM, although they still continue production of their cars only for export. Thus, we can see that the Indian car market can be a savage and crippling environment. Why, then, is there news of many new manufacturers and products entering the market? That’s because not every segment is reporting poor sales.

Sales of premium hatchbacks and compact SUVs are strongly rising, and many manufacturers are introducing even more models into these segments.

First up, the SUVs; Kia, MG motors, and Citroen are all set to enter the Indian market, each with an SUV of their own. Nissan Kicks, which is the Nissan’s international replacement for its Juke crossover, was introduced to India earlier this year, and Renault has slashed prices of its Duster. Mahindra has also aimed for a piece of this pie with the new XUV300, based on the SsangYong Tivoli. Of course, there is the segment leader, Maruti Suzuki Vitara Brezza and Hyundai Creta, both of which have consumers flocking into their showrooms with bags full of cash every month.

As for premium hatchbacks, Maruti and Hyundai take the first and second place respectively once again here, with their brilliant Baleno and i20, in terms of sales figures per month.

So why are the sales for these cars strong while the rest of the market is in a slump, well, there may be a number of reasons for that?

It has been noted that young men and women are the largest cars buying demographic in India, and a lot of them enter a showroom looking to buy their first car. Instead of going for a cheap, entry-level small car though, they go for a slightly more premium car. The primary reason for that could be that a cheap car isn’t very aspirational, and as buying a car is a long-term commitment, young people want their vehicles to be ‘good’ at the very least. Also, owning a car is a status symbol in India, and people want to able to flaunt their rides.

Second could be consumer awareness. The Indian government is taking steps to make roads safer in India, and cars that don’t pass safety tests will soon disappear from the market. But even before that, many people are becoming aware of car safety as well. People now refuse to buy cars that have been deemed unsafe, as evident by Tata Nano, a car which failed to sell even a single unit in this year. There’s even been a trending hashtag about it (#SaferCarsForIndia).

One other reason could be that premium hatchbacks and Compact SUVs are simply more practical than a traditional sedan, and thus are enjoying better sales too. A large hatchback offers more space than a sedan but will be smaller in dimensions and easier to drive as well, not to mention lighter and more fuel efficient. An SUV, on the other hand, might be equal or bigger than a sedan, but with the larger size comes an imposing road presence, good drivability, and of course, a better ‘flaunt’ factor as well.

Lastly, cheap sedans were always a hit-or-miss kind of market, and many cars never really had good sales to begin with. Products like Volkswagen Ameo and Fiat Linea failed to attract the Indian audience, just like Maruti Suzuki SX4 and Ford Fiesta did in the past. They were all critically acclaimed, with nice build quality as well, but still, lots of consumers refused to bring them home.

So are things hopeless for all cars except SUVs and big hatchbacks? Well, not really. Honda City has reported wonderful sales figures, and the recently re-introduced Civic sedan has had more bookings than expected by the Japanese auto giant. Maruti Suzuki Ciaz is also selling like hot cakes, and VW has decided to stick to their niche numbers with the Vento and focus more on the Skoda brand.

Regardless of what happens in the auto market, it can’t be denied that 2019 will be an interesting year for India. Let’s wait and see if any new trends also show up mid-year!