Timeline: How small cars face big challenge from rise of utility vehicles

From Duster and EcoSport to Creta and beyond, utility vehicles, including SUVs, have made a big impression on the minds of customers in India.
By : Shubhodeep Chakravarty
| Updated on: 16 Mar 2022, 02:53 PM
More options across price brackets as well as an aspirational nature among Indian buyers is helping UV segment grow in the country.
More options across price brackets as well as an aspirational nature among Indian buyers is helping UV segment grow in the country.
More options across price brackets as well as an aspirational nature among Indian buyers is helping UV segment grow in the country.
More options across price brackets as well as an aspirational nature among Indian buyers is helping UV segment grow in the country.

The Indian car market has always been dominated by small passenger cars that are mostly affordable and suit Indian traffic conditions perfectly owing to their overall exterior dimensions. With plenty of options in the market, such vehicles have been the undisputed rulers of roads here but the hegemony is now under some very serious threat with the bulk of the challenge coming from utility vehicles (UVs).

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A research report by Indian analytical company CRISIL titled ‘UV Thrust’ notes that while the share of small cars in the Indian automobile market declined from 65% in fiscal 2021 to 45% in the first nine months of fiscal 2022, UV models have seen a steady uptick.

Rise of Duster, EcoSport and Ertiga:

Noting that the past decade saw options in the UV segment grow significantly with the entry of models like Renault Duster, Maruti Suzuki Ertiga, Ford EcoSport and XUV500, the report highlights that the entry of the so-called sports utility vehicles (SUVs) in the under 20 lakh price bracket has played a big role in helping UVs find increased favour. In this particular regard, the entry and farings of the Duster and subsequently of EcoSport has been especially credited.

The Renault Duster is mostly credited for pushing more and more Indian customers towards a more affordable SUV option.
The Renault Duster is mostly credited for pushing more and more Indian customers towards a more affordable SUV option.
The Renault Duster is mostly credited for pushing more and more Indian customers towards a more affordable SUV option.
The Renault Duster is mostly credited for pushing more and more Indian customers towards a more affordable SUV option.

Race to top for Creta, Vitara Brezza:

The report goes on to note that while Hyundai entered slightly late to the UV partty, its Creta has managed to steal the spotlight. Launched first in 2015, the Hyundai SUV remains a hot model till date. But for someone looking for SUV body type with smaller dimensions and a more affordable price tag, it is the Maruti Suzuki Vitara Brezza that really delivered on plenty of counts. The sub-compact SUV was first launched here in March of 2016.

Vitara Brezza was first showcased by Maruti Suzuki at Auto Expo in 2016 and the updated version seen here was showcased at the Auto Expo 2020.
Vitara Brezza was first showcased by Maruti Suzuki at Auto Expo in 2016 and the updated version seen here was showcased at the Auto Expo 2020.
Vitara Brezza was first showcased by Maruti Suzuki at Auto Expo in 2016 and the updated version seen here was showcased at the Auto Expo 2020.
Vitara Brezza was first showcased by Maruti Suzuki at Auto Expo in 2016 and the updated version seen here was showcased at the Auto Expo 2020.

Enter Kia and MG:

While the SUV space was hotting up, in came new players Kia and MG Motor in 2019 with a clear and determined focus on make the most of the segment on the rise. The Kia Seltos remains a solid performer for the Koreans while the Hector delivers for MG. Both Seltos and Hector managed to establish the respective brands, laying a solid platform from which to build on.

Hector from MG Motor (in pic) and Seltos for Kia remain solid performers.
Hector from MG Motor (in pic) and Seltos for Kia remain solid performers.
Hector from MG Motor (in pic) and Seltos for Kia remain solid performers.
Hector from MG Motor (in pic) and Seltos for Kia remain solid performers.

Car field littered with options:

At present, almost every OEM has at least one utility vehicle to offer to potential customers. The launch of Skoda Kushaq, Volkswagen Taigun, Mahindra XUV700 or even smaller options like Nissan Magnite, Tata Punch and Renault Kiger have only helped the UV segment as a whole grow.

Nissan Magnite (in white) and Renault Kiger are both manufactured at the same RNAI plant near Chennai.
Nissan Magnite (in white) and Renault Kiger are both manufactured at the same RNAI plant near Chennai.
Nissan Magnite (in white) and Renault Kiger are both manufactured at the same RNAI plant near Chennai.
Nissan Magnite (in white) and Renault Kiger are both manufactured at the same RNAI plant near Chennai.

The CRISIL report highlights that while the number of models in the small and large cars' category has reduced over the past severl years, the number has only grown - and grown sharply - in the UV category.

What's powering UVs?

Having a plethora of options is an obvious factor for the popularity of UVs in India in past several years. But there is also an aspirational factor at play, states the CRISIL report. A taller driving stance, a more upright body style, higher ground clearance, maximization of space and bolder road presence has enormously contributed to the success of many such models.

And with a price overlap between compact SUVs, premium hatchbacks and entry-level sedans, there is a cross consideration factor in the market as well. This is only likely to further galvanize the preference for UVs in the coming times, especially with a clear focus on personal mobility in Covid-19 times. "Between fiscals 2021 and 2026, we expect UVs to outperform other segments and log a CAGR of 14-18% compared with just 4-6% in small cars," the report concludes. “We also expect the share of the UV market to increase gradually to 51-53% in fiscal 2026 from ~39% in fiscal 2021."

 

First Published Date: 16 Mar 2022, 02:53 PM IST
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