A shift in the demand toward bigger and more premium cars in recent years has brought down the sales of small cars in the Indian market, so much so that in the ongoing financial year the highest selling model is a compact sedan: Maruti Suzuki’s compact sedan Dzire. The model has become the best-selling passenger vehicle model in the domestic market, overtaking the company’s small car Alto.
Industry experts say that the decline in small car sales can be attributed to many factors. One of the top reasons that boosted sales of bigger vehicles is growing income levels and aspirations of first-time buyers. “Around one-third of the cars in the Rs 5-10 lakh category are sold to first time buyers,” an auto analyst told this paper.
First-time consumers, he added, are now willing to pay extra for premium and safety features which are not available in smaller cars. The social prestige that accrues from owning bigger cars is also a factor. Data show, for instance, that while utility vehicle sales grew at a rate of 11 per cent between FY13-FY18, this was 3 per cent for cars.
Another reason is that there have been fewer small car launches. Global auto majors such as Honda, Toyota, Ford and domestic manufacturer Mahindra & Mahindra have an almost negligible presence in the segment, with no signs of launching a vehicle in the sub-5 lakh category currently.
Renault India and Nissan’s Datsun had launched models in the segment and witnessed good demand initially, but they haven’t been able to maintain momentum. The segment is almost entirely dominated by Maruti Suzuki, Hyundai Motors and Tata Motors.
While some believe that the trend will continue, others say small cars could make a comeback in the next year, with the new Hyundai Santro and a reviving rural market. Bookings for the Santro have already hit 45,000 units since its launch and the model is already on the top ten sellers list. Maruti Suzuki’s upcoming launch of the new Wagon R is also expected to boost the segment.