A series of successful new launches in the utility vehicle (UV) segment over last 3-4 quarters has changed the dynamics of the domestic passenger vehicle (PV) market. UVs, which used to constitute one-fifth of the PV market, till last financial year, now contribute over 25%. In effect, one of every four PVs sold is now a utility vehicle.
Hatchbacks still constitute the bulk of passenger vehicle market but their share is coming down due to a flat performance. But their share has come down from over 73% in April-May last year to 68% now. Their loss has been UV segment’s gain. UVs have shown strong double digit growth in the recent months. In April-May period of the current financial year, UV sales grew over 39% to 120,963 units. Industry observers expect growth to continue in this segment.
The growth of UVs is not due to older larger SUVs that were seen as fuel guzzlers. The expansion of UV segment with the entry of several compact vehicles has given a push to sales. Four leading carmakers — Maruti Suzuki, Hyundai, Honda and Mahindra & Mahindra (M&M) — have entered this space in the past one year.
Most of these new launches have clicked well with the buyers. Both Hyundai Creta and Maruti Suzuki Vitara Brezza are doing average monthly sales of 7,500 units in domestic market. M&M’s KUV100 clocks over 4,000 units a month while TUV100 does monthly volumes of 2,000 units. These compact SUVs have emerged as a dominant segment within the UVs pointing to a rising preference among buyers for such vehicles.
A compact SUV is loosely defined as a five-seater vehicle with engine capacity of less than 2,000 cc, with an entry-level price of Rs 7-8 lakh. Some are less than four metres in length, while some exceed it. With its modern style, features and attractive pricing, this segment has started appealing to a wider segment of buyers, compared to the bigger traditional SUV.
Another element of the compact SUV is a petrol option, which the earlier SUVs never had. Vehicles such as the Creta, KUV100, Ford EcoSport and Renault Duster are available in both petrol and diesel variants.
Rakesh Srivastava, senior vice-president (sales & marketing) at Hyundai, says compact SUV is now a full-fledged segment and is growing at a faster rate than the sedan and hatchback. “It is emerging as a highly disruptive segment and is appealing to both sedan and hatchback users. In comparison to earlier SUVs, which were basic in features and rugged in looks, compact SUVs are more stylish and loaded with better features. Buyers are even willing to pay a premium over sedans and hatchbacks for compact SUVs," he said.