More car buyer upgrade to compact SUVs, mid-size sedans, premium hatchbacks
While car buyers are going for second-hand entry level hatchbacks, when the go in for an upgrade it is either a compact SUV, mid-size sedan or premium hatchback.
Key highlights:
- More first-time buyers are choosing to buy second-hand compact hatchbacks
- They upgrade to mid-size sedans, compact SUVs or premium hatchbacks
- Overall market share of SUVs in India's passenger vehicle market has increased to about 27% from 14% five years ago
The 'premiumisation' factor seems to be catching up in India's largely 'small-car' market.
Customers today seem to be upgrading to larger more expensive cars such as SUVs, mid-size sedans and premium hatchback.
Overall market share of SUVs in India's passenger vehicle market has increased to about 27% currently from around 14% five years back, according to a recent HSBC report. The mini segment, on the other hand, is only 28% market share, down from 45% in FY09.
TRENDING NOW
ALSO READ: Big ticket cars, bikes setting the pace of growth for automobile firms
Source: HSBC Global Research Indian Autos report
The reason for this, according to HSBC, is that more first-time buyers are choosing to buy second-hand compact hatchbacks and then upgrading to mid-size sedans, compact SUVs or premium hatchbacks. As a result entry-level small hatchback market is slowly losing the demand it once had in the market.
The attractions for premium cars are higher ground clearance, more room and the desire to upgrade to a smarter vehicle. The desire to meet customer expectations has led to a number of compact SUV, sub-compact SUV models being launched in recent years, says the report.
ALSO READ: Majority of car companies post good growth in sales May
The report further forecasts the slow end to the dominance of the mid-size sedans with mid-size SUVs gaining popularity. “Mid-size sedans, those below 4m in length, benefit from lower excise duty. The segment has been an extraordinary performer, led by the iconic Maruti Dzire. But we think the popularity of mid-size SUVs (with similar taxes), with their similar price range and handling, is a threat and buyers are upgrading from mid-size Sedans to mid-size SUVs,” the report said.
Source: HSBC Global Research Indian Autos report
With the launch of new models, the SUV market has rebounded strongly after underperforming car sales over the past few quarters. SUVs account for around 26-27% of the total passenger vehicle market, it adds.
Premium hatchbacks have also gained shares from mid-size hatchbacks and also cannibalised some sales from mid-size sedans, in our view.
12:25 pm
Big ticket cars, bikes setting the pace of growth for automobile firms
Pan masala gutkha to attract 204% cess, SUVs 15%
Mahindra to launch two new SUVs to arrest falling market share
Demand for hatchbacks priced below Rs 3.5 lakh on the decline
Hatchbacks are slowly falling out of favour with Indians