Indian small car exports boom amid shift to domestic SUV demand

As Indian consumers increasingly prefer SUVs and feature-rich vehicles, smaller cars from manufacturers like Maruti Suzuki and Hyundai are finding new
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Kwid Baleno i10
Both Maruti Suzuki and Hyundai have reported strong demand for these smaller models abroad and expect this trend to continue.
Kwid Baleno i10
Both Maruti Suzuki and Hyundai have reported strong demand for these smaller models abroad and expect this trend to continue.

As Indian consumers increasingly favour SUVs and feature-rich vehicles, smaller cars manufactured by companies like Maruti Suzuki, Hyundai, Citroen, Volkswagen, Honda, Nissan, and Renault are finding success in international markets.

The trend has resulted in a significant shift in the automotive landscape, with small cars now comprising less than 30 per cent of India's passenger vehicle (PV) market.

Decline in domestic demand

The small car segment, once a dominant force in India's PV market, has seen a sharp decline in recent years. In the financial year 2017-18 (FY18), small cars accounted for 47.4 per cent of the total PV market share.

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This figure dropped to 46 per cent in FY19 and slightly rebounded to 46.5% in FY20. However, the trend towards SUVs has continued, with the SUV segment contributing 53.6 per cent to the total PV industry in FY24.

Also Read : Expect revival in small cars segment in 2 years: RC Bhargava

Boost in exports

Amidst this domestic shift, Indian automakers have ramped up exports of small cars to various international markets. In FY24, Maruti Suzuki exported 280,000 cars, including models like the Swift, Dzire, S-Presso, and Baleno, to countries such as South Africa, Saudi Arabia, Chile, Mexico, and the Philippines.

Similarly, Hyundai exported sedans like the Verna and Aura, along with the Grand i10 Nios, to markets including South Africa, Saudi Arabia, Mexico, Chile, and Peru.. Both Maruti Suzuki and Hyundai have reported strong demand for these smaller models abroad and expect this trend to continue.They also see potential for a resurgence in demand for small cars within India.

Optimism for small car revival

Despite the current preference for larger vehicles, automakers are optimistic about the future of the small car segment. A resurgence in the two-wheeler market, which has been in decline since 2018-19, is seen as a positive indicator for small car sales. The rise in hatchback prices due to stringent safety and emissions regulations has impacted affordability, but manufacturers believe the segment will revive by the end of 2026 or 2027.

Maruti Suzuki has expressed confidence in the potential for growth, driven by India's "Make in India for the world" vision. The company believes that the time is ripe for significant expansion in PV exports, expecting exponential growth in the coming years.

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.

First Published Date: 27 May 2024, 09:39 AM IST
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