Small is passé and is no longer beautiful for Indian car buyers. The passenger vehicles sales in India are growing rapidly year on year, in one of the world’s fastest developing economy and the small car sales have remained stable and neutral for the most of the last decade.
According to IHS Markit, a sales forecasting, and market research firm, Passenger vehicle sales in India advanced 27 percent to 3.3 million in 2017-18 from 2.6 million in 2011-12. But as far as small cars were concerned the sales fell to 1,352,000 from 1,358,000 in the same period.
Micro and mini models such as Alto, Wagon R, Tata Nano and Renault Kwid haven’t shown any increase in sales and the sales are more or less stable.
Maruti which has a market share of 50 percent also saw an increase of only 3 percent in small car segment in 2017-18. While SUV’s and sub-four meter sedans grew 29.6 percent and 28 percent.
According to Rakesh Shrivastava, director of sales and marketing, Hyundai Motor India, the increased demand for SUVs and small sedans has been fueled by more launches and competitive pricing.
40 models of SUVs have been launched over the past seven years while in the same period only 20 small cars have been launched. This shows a clear preference of customers for bigger vehicles and also how companies are responding to the new trend and market sentiment.
Puneet Gupta, associate director at IHS Markit said “The share of hatchbacks has been shrinking at the expense of compact sedans and SUVs. We think Indian government is not doing enough to push mini, small cars,”. He also added that the tax-regime was in the favor of SUV’s and that the lower GST on small cars was an eyewash.
He added that Most of the manufacturers are selling sedans and SUVs under the tax structure applicable for small cars. He was also quoted as saying that “Given the congestion on the roads, parking woes and inadequate infrastructure, it is time for the government to strictly differentiate a small car by category, such as a hatchback,”
But Rakesh Shrivastava is not losing hope. He said that the segment has its own clientele and will hold its ground and sales might increase with a more pro-small car tax regime and better fuel efficiency with competitive pricing.
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