Small Cars Passé, For­eign Au­tomak­ers Ride in on SUVs

Close to half a dozen car cos line up util­ity ve­hi­cles for their In­dia de­but en­cour­aged by boom­ing sales in the seg­ment

The Economic Times - - Front Page - Ke­tan.Thakkar@ times­group.com

Mumbai: The small car, which has long been seen as the best bet in the In­dian au­to­mo­tive mar­ket, is slowly be­ing pushed aside by the more glam­orous and costlier util­ity ve­hi­cles. The in­dus­try sees this as the sign of a ma­tur­ing mar­ket.

Close to half a dozen au­tomak­ers that are ready to en­ter the In­dian mar­ket have lined up util­ity ve­hi­cles as the launch prod­uct, in a coun­try where the price and run­ning cost were tra­di­tion­ally the most cru­cial fac­tors that in­flu­enced the buy­ing de­ci­sions.

But lat­est sales trends sug­gest changes in the be­hav­iour of the In­dian con­sumer. Growth in util­ity ve­hi­cle sales now grossly out­paces the in­dus­try. This has en­cour­aged car­mak­ers such as SAIC, Kia, PSA, Borg­ward and Changan, which are set to en­ter the mar­ket over the next three to four years, to con­sider driv­ing in an SUV first to woo the buyer here.

Gau­rav Van­gaal, a se­nior an­a­lyst at fore­cast­ing firm IHS Markit, said he is not sur­prised by the de­ci­sion of th­ese com­pa­nies as the SUV seg­ment is go­ing to post a com­pounded an­nual growth rate of more than 15% through 2020, com­pared with 8% for the in­dus­try.

Sales of util­ity ve­hi­cle, which in­clude sport- and multi-util­ity ve­hi­cles, to­talled 7.6 lakh units in fis­cal 2017, more than a quar­ter of the to­tal pas­sen­ger ve­hi­cles sales in the coun­try.

SAIC, Kia, PSA, Borg­ward and Changan are set to en­ter In­dia in 3-4 years

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