Healthy GDP growth, an increase in income levels, coupled with introduction of new models, such as Maruti Suzuki Alto K10 and Tata Tiago EV, will likely boost sales of hatchbacks, Indian industry executives said, with 1.37 million units estimated to be sold in the segment by March 31. As many as 994,000 hatchbacks were sold in the country between April and December, 2022.
Interestingly, hatches including WagonR, Baleno, and Alto took four of the five slots on the list of top-selling models. These are cars purchased by those stepping on to the automotive consumption ladder for the first time.
Tata Nexon is the only SUV to have made it to the best-selling list in the first nine months of FY23. Shashank Srivastava, senior executive officer (marketing and sales), Maruti Suzuki told ET that several factors – rising input costs, increase in road tax levied by state governments, and transition to higher emission and safety norms – caused a spike in vehicle prices in a price-sensitive segment. “Vehicle prices at the entry-level went up much faster than income levels of buyers the last few years, which impacted demand,” said Srivastava.
Sales of small cars fell to 1.15 million units last fiscal, from a peak of 1.55 million in FY19. Sluggish sales prompted several automakers – from Nissan to Honda Cars India and Volkswagen – to exit the small-car market in the country. The total number of models on offer in the segment now stands at 16 from 29 in FY19.
Latent demand, though, remains massive in a country where more than 65% of consumers are aged less than 35 years, if affordability constraints are addressed.
“First-time buyers account for 47-48% of vehicle sales in India. Given low vehicle penetration and the lack of adequate public transport systems in the country, demand for cars, be it new or pre-owned, is there at the entry-level,” Srivastava said. “If income levels continue to go up and vehicles are provided at affordable costs, there is a massive potential for growth.”
Tarun Garg, chief operating officer (sales, marketing, service and product strategy) at Hyundai Motor India, said CNG-driven vehicles are a good option to extend mobility at affordable cost at the entry-level. “The rise in gas prices is, I hope, temporary. CNG holds value, especially at the entry-level,” Garg said. “With the number of dispensing stations going up within cities, as well as geographically, it is emerging as a viable and affordable option for consumers .”
