Compact utility vehicles push up auto sector sales

Utility vehicles, which used to constitute about one-fifth of the passenger vehicle market till 2015-16, now contribute over 25% of the total car sales

A series of successful compact utility vehicle launches over four quarters has changed the dynamics of the domestic passenger vehicle market.

Utility vehicles, which used to constitute one-fifth of the passenger vehicle market till 2015-16, now contribute over 25 per cent. Cars still constitute the bulk of the passenger vehicle market but their share has come down from over 73 per cent in April-May 2015 to 68 per cent now. Utility vehicles have shown double digit growth in recent months.

In April-May 2016, utility vehicle sales grew over 39 per cent to 120,963. Industry observers expect the growth to continue in this segment. The entry of several compact utility vehicles has given a push to sales.  Maruti Suzuki, Hyundai, Honda and Mahindra & Mahindra (M&M), have entered this space in the past year.

Most of the launches have clicked with buyers. Hyundai’s Creta and Maruti Suzuki’s Vitara Brezza have average monthly sales of 7,500.  M&M’s KUV100 clocks sales of over 4,000 a month and the TUV100 clocks sales of 2,000.

A compact utility vehicle has five seats and an engine smaller than 2,000 cc with an entry-level price of Rs 7-8 lakh.

Some are less than four metres in length and others exceed it. With modern styling, features and attractive pricing, this segment appeals to a wider segment of buyers than the traditional sports utility vehicle.

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.