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Home Uncategorized Utility vehicles account for 34% of passenger vehicle sales

Utility vehicles account for 34% of passenger vehicle sales

CHENNAI: India’s newfound love for utility vehicles has taken the share of that segment from a mere 13% of total passenger vehicle sales nine years ago to more than one-third so far this fiscal.

In 2010-11, the auto industry rolled out 78 new cars on Indian roads and 36 new UVs. So far in the current financial year, 53 new cars have been launched, and an equal number of UVs have been launched, according to data from industry body SIAM.

So sharp has the shift towards UVs been that the segment’s overall share of the passenger vehicle pie has gone up from 27% in April-December 2018 to 34% in April-December 2019. UVs have also bucked the slowdown, with sales rising 6% to over 7.2 lakh units during April-December 2019. In contrast, car sales dropped 23.6%, while overall passenger vehicle sales fell 16.4% in this period, according to SIAM data.

“India is following a global trend where UVs are increasing their share of overall PV sales. This is because UVs have been evolving into multipurpose vehicles. They offer higher ground clearance, easier mobility on unpaved roads, more space for larger families and more engine power. There have been more UV launches than cars and that trend is global too. This shift should settle with UVs at around 45-50% of the PV market in 3-4 years,” said SIAM president Rajan Wadhera.

Industry players do not expect the trend to change even after the switchover to BS-VI from April. “UVs have already entered the sub-4 metre category where more gasoline SUVs are being sold than diesel. Post BS-VI, SUVs in the Rs 13-20 lakh range will still be largely diesel but the compact UV will be mostly gasoline,” said Wadhera, who is also the president of Mahindra’s auto division. Currently, diesel commands a 70% share of the UV market.

Auto analysts say the increase in SUV sales has come at the expense of mid-size sedans. “With the compact SUV segment, the average price of SUVs has come down from Rs 15 lakh to less than Rs 10 lakh and so the customer who would earlier buy, say a Ciaz, City or Verna is now often buying an SUV,” said Ashish Modani, vice president at ratings agency ICRA.

The popularity of the SUV is also reflecting on the used car market. Said Ashutosh Pandey, CEO, Mahindra First Choice Wheels: “In used vehicles too, UVs have a growing share, though it is lower at around 25%. This is so because a large number of vehicles sold in the used car market is old hatch and entry level models such as i10, Alto etc.” As hatch owners upgrade, supply of old hatch and entry cars have gone up in the used car pool.

Currently the SIAM classification of UV includes both larger chassis based vehicles like the Toyota Fortuner as well as compact monocoque vehicles like the Vitara Brezza. “In India the UV segment spans everything from larger SUVs to MPVs to crossovers but in the lower end the UVs are mostly car-like or monocoque whereas higher priced vehicles are both chassis built as well as monocoque,” said Modani.

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