They are big yet manageable; powerful but fuel-efficient; run on diesel yet reliable. Gone are the days when a drive in an ‘offroad vehicle’ meant a vibrating engine and jumpy ride or super-exorbitant prices. With shrinking sizes and prices starting as low as Rs 6 lakh, sports utility vehicles (SUV) and multi-utility vehicles (MUV) are fast becoming middle-class India’s automobile of choice. According to the Society of Indian Automobile Manufacturers (SIAM), passenger cars grew by only 2.19 per cent in 2011-12 while the Utility Vehicles segment grew by 16.47 per cent. The UV segment accounted for 14 per cent of the over 26 lakh passenger vehicles sold in India during the year.
“UVs are the way forward in India,” says one expert. “Not for India the fuel-thirsty SUVS that need a full garage to themselves or are designed primarily for off-road performance. What we need are small, efficient utility vehicles.”
Manohar Bhat, VP (Marketing) for Maruti Suzuki Limited, cites three reasons for the newfound popularity of the UV: additional space, which allows them to be used as ‘people movers’, strong rugged looks and design that makes them suitable for Indian road conditions and, third, the diesel orientation. “All these together have contributed to the 20.2 per cent growth witnessed by this segment in the first six months of this fiscal,” he says.
The Ertiga, which Maruti launched last April, has helped the company shed its small and midsize image. Bhat says Ertiga, which is positioned a ‘life utility vehicle that puts power, performance, space and features in a compact package’, has sold over 45,000 units and has a waitlist of around 25,000. According to October 2012 sales figures, Maruti has registered an increase of 2640.7% from sales in October last year and a 1060.5% jump since October 2012, in the UV segment alone.
Sandeep Singh, deputy managing director (marketing) for Toyota Kirloskar, says the rise of the UV is an expected outcome. “The younger generation is earning a lot more. It doesn’t want to restrict itself to small or midsized cars. There has always been an aspiration to own an SUV in India,” he says. Toyota, which manufactures the Innova and Fortuner in India, attributes its 14 per cent growth in October 2012 to high sales of these two products.
Says Singh: “Despite an overall slowdown and sluggish market conditions in India, the UV segment has done well and the market continues to grow.” Reportedly the company has been conducting feasibility studies for subcompact UV’s and other segments to bridge the gap between their sedans and UV’s.
According to Rajiv Mitra, VP, Public Affairs and Communication, Renault, today’s SUVs “combine the best of both worlds”. Fifteen thousand units of the Renault Duster, which was launched this July, have been delivered so far and 25,000 orders are in the pipeline. Even though the Duster has a minimum four-month waiting period, demand for it is on the rise. “It is a UV with all the attributes of a sedan, is accessible to everybody and provides value for money,” says Mitra.
Duster has become a mass segment vehicle due to its competitive pricing, he adds. Renault also sells another UV in India but the Koleos, which is priced at over Rs 22 lakh, has not seen the same demand.
“With the launch of the Maruti Ertiga and M&M Quanto, the entry point for UVs has come down,” explains Yaresh Kothari, research analyst (auto) at Angel Broking. Though most first-time buyers still opt for a small car, “the preference is moving towards an SUV/MUV,” says Kothari.
So can the segment take on the small car market in India?
No, says Sugato Sen, senior director at the Society of Indian Automobile Manufacturers (SIAM). “UV’s with a monocoque chassis have helped bridge the gap and the distinct features of SUVs are getting blurred. Still, they are unlikely to challenge the dominance of the small car segment,” he says. Sen says it is the large number of UV options that has really ‘kick-started’ the market while the competitive pricing has helped sales.
Renault’s Mitra too sees no threat from UVs to the small car segment because “a person with a small car will have to scale up by almost Rs 3-4 lakh to upgrade to an UV.”
Though competitive pricing is an essential factor in the enhanced sales, most players in the industry claim to be competing to provide only “better value for money”. However, Toyota says the segment is likely to witness a price war, but the company would not participate in it. “We won’t have to compete in the price war. Innova and Fortuner have already established themselves and proved their capabilities,” he says.
On whether the segment will continue to grow at its current pace, Singh says UV penetration will only increase in the coming years. “Currently, UV penetration is 20 per cent. This is expected to grow to 30 per cent in the next five years,” he claims. Watch this space.
“It’s the way forward for the Indian market,” says one expert. “Not for India the fuel-thirsty SUVS that need a garage to park, not for India the SUVs that are designed primarily for off-road performance. What we need is smaller, more efficient utility vehicles, to flaunt, commute, and only sometimes to flog. The Duster has shown the way, the Ecosport is coming, and a whole new section has just been prised open in the Indian market.”