By Avishek Banerjee
Rajneesh Bansal (in his late 40s), the founder of a steel fabricating firm, wanted to switch from a midsize sedan to a large sports utility vehicle. After weighing his options, the Bhilai-based businessman went in for a seven-seater, feature-packed SUV even though the dealer said he would have to wait 40 weeks for the vehicle to be delivered.
Bansal said he stretched his budget beyond Rs 20 lakh and went for an automatic transmission premium SUV costing Rs 29 lakh. Equipped with an advanced driver-assistance system (ADAS), six airbags and other safety features, the vehicle’s road handling capabilities ensure that driving on any terrain is a breeze, according to Bansal.
“I have a family of five members which couldn’t be accommodated in the sedan I used to own earlier. So I needed a vehicle which had bigger space, higher ground clearance and was built by a homegrown brand. I would like to drive the car myself, so I finally picked an SUV that not only inspires confidence but also has a remarkable presence on the road,” Bansal told Moneycontrol.
Thanks to customers like Bansal, demand for SUVs has burgeoned over the past few years. After holding a 23.3 percent share of the passenger vehicle market in 2018, the SUV segment accounted for 48.7 percent of the 2.46 million units sold as of October-end. In October alone, 198,534 units were sold – over 50 percent of the total, according to industry officials.
Back-of-the-envelope calculations by the top five industry players predict that SUVs will account for almost 50 percent of 4.1 million-4.3 million passenger vehicles expected to be sold in 2023, which could take total SUV sales to about 2 million units. Last year, total passenger vehicle sales touched 3.43 million.
According to JATO Dynamics India, an automotive data intelligence company, the key drivers of India’s booming SUV market include changing consumer preferences, improved road conditions, more safety and comfort features, increased income levels, urbanisation, customisation options, rugged appeal, and competition among automakers.
“Customers in this market have diverse profiles, including families, young professionals, urban dwellers, outdoor enthusiasts, affluent buyers, and residents of suburban and rural areas,” noted Ravi Bhatia, MD of JATO Dynamics India.
While carmakers have managed to cut down the prolonged waiting period for bestselling models – largely SUVs – caused by a shortage of semiconductors, most companies have not been able to increase production to match the current demand. As a result, utility vehicle bookings continue to skyrocket despite improved semiconductor supplies.
Mahindra & Mahindra, India’s largest utility vehicle maker, said recently there is sustained demand for its SUVs such as the XUV7OO, Scorpio-N, and Thar. A senior executive at the Mumbai-based automaker said that while monthly output is 39,000 units, average bookings are 51,000 units a month.
“The booking pipeline continues to be very strong as we have 286,000 units open bookings till November 1,” Rajesh Jejurikar, CEO of the auto and farm business at M&M, told reporters recently.
He said M&M had bookings for 10,000 XUV300 and XUV400 units, 70,000 XUV700 units, 76,000 Thar vehicles, 11,000 Bolero units, and 119,000 units of Scorpio (including Classic).
Market leader Maruti Suzuki India said its average SUV sales have increased to about 36,000 per month this year from 15,000 units per month in 2017-18. While the SUV segment has expanded 27 percent this year, for Maruti Suzuki, the growth was 172 percent.
The company currently has an orderbook for 226,000 passenger vehicles, of which 126,500 are utility vehicles. The order backlog includes 2,400 units of Jimny, 31,000 units of Brezza, 11,000 units of Fronz, 12,000 units of Grand Vitara and 70,000 units of Ertiga. The average waiting period of all the models is 2-3 months.
As Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki, put it, “The SUV segment has been growing rapidly over the last few years… It is expected that SUV sales will cross the 2 million mark (this year). This customer trend has resulted in many OEMs introducing multiple new products in this category.”
With a revamped line-up, Maruti Suzuki intends to corner 50 percent of the country's passenger car market.
“We have seen a huge transformation in this regard. From just one SUV in our portfolio and from being No. 5 in SUVs in Q1 last year, we now have a portfolio of four SUVs with a 23 percent share and are the No. 1 SUV maker in the auto industry during H1 of FY24. This is quite a dramatic change,” added Srivastava.
For Hyundai Motor India, SUVs accounted for 53.2 percent of sales last year. The South Korean carmaker claims its SUV portfolio received a “further boost” this year with the launch of micro-SUV Hyundai Exter, which has attracted almost 100,000 bookings till date. The company’s SUV share currently stands at 58.6 percent.
“The growth can be attributed to the higher demand of Hyundai SUVs like the Creta, Venue and the newly launched Exter. Creta has been the highest-selling model in the SUV portfolio with a contribution of 45.6 percent to Hyundai’s SUV sales,” said Tarun Garg, COO of Hyundai Motor India. “Hyundai’s biggest launch for the year – Exter – has received an overwhelming response… We believe we will end the year with around 60 percent contribution from SUVs.”
Tata Motors also has a wider SUV portfolio consisting of the recently launched Harrier, Safari, Nexon and the Punch. The Mumbai-based automaker claimed that SUVs contributed over 60 percent of its total sales and each one of them are among “top in their segments”.
“The current contribution of SUVs is over 60 percent and we expect the SUV share to further go up backed by the recent launches,” stated Vinay Pant, Head of Marketing, Tata Motors Passenger Vehicles Limited.
Honda Cars India Limited (HCIL) claimed its midsize SUV Elevate, which was launched in September, has got a good response.
“In the last two months, Elevate comprises of almost 50 percent of our domestic sales, backed by strong response to the model and overall robust demand for mid-size SUVs,” Kunal Behl, VP of marketing & sales at HCIL, said in an emailed response to queries sent by Moneycontrol.
The Federation of Automobile Dealers Associations said SUVs are the flavour of not just one but multiple seasons. From 15-18 percent before the pandemic, SUV penetration in the passenger car segment is now close to 50 percent.
“If you look at the kind of bookings that dealers are getting right now, only premium SUVs are commanding a huge waiting period,” Manish Raj Singhania, president of FADA, told Moneycontrol. “Post-Covid, SUVs have become an extension of their drawing rooms after the lockdown era.”