MUMBAI: Even as domestic four-wheeler sales grew 8% to a record high in FY26, passenger car sales, which include hatchbacks and sedans, rose just 1.9% year-on-year to 13,78,771 units. Their share in total passenger vehicle (PV) sales slipped below 30% from 31.5% in FY25, per Society of Indian Automobile Manufacturers (SIAM) data. The tepid growth reflects fewer launches and SUVs’ surging popularity among buyers.
Demand for hatches and sedans took a further hit in the January-March quarter with sales declining 0.3% to 375,659 units as against 376,772 units in the same quarter of the last fiscal. Contrary to this, utility vehicle (UV) sales surged by more than 20% in the reported quarter to nearly 9 lakh units.
“Hatchbacks will remain popular as they are a preferred choice for many first-time buyers. What we are seeing is that mini SUVs have become an alternative to hatchbacks. But that being said, appeal for hatchbacks will be there due to their practicality in congested urban centres and affordability quotient among first-time buyers. However, that can't be said for mass market sedans. Buyers of sedans have moved to SUVs and sales here are primarily driven by fleet operators,” said Puneet Gupta, Director, S&P Global Mobility.
He added that hatchback percentage share may further shrink risks due to price increase because of stricter emission norms in the coming years.
India’s PV industry closed FY2025-26 at a record high with domestic sales rising 7.9% year-on-year to 46.43 lakh units, as per Siam data. The growth was supported by income tax relief, repo rate cuts and GST 2.O in late September which boosted demand in the second half of the fiscal. UVs drove demand with 11% sales growth, capturing 67% of India’s PV market.
Players strong in this segment outperformed the industry’s overall growth. Tata Motors Passenger Vehicles (TMPV), which sells Nexon and Punch, reported a 14.05% increase in FY26 sales to 631,387 units while Mahindra&Mahindra sales grew b 20% to 6,60,276 units, driven by strong demand for models such as XUV 3XO, Scorpio-N, Thar Roxx and XUV 7XO. India’s largest carmaker Maruti Suzuki, which dominates the hatchback and compact sedan segments, reported sales growth of 3.54% to 18,23,129 units.
Despite a clear shift towards UVs, the current-gen Maruti Suzuki Dzire emerged as the top-selling four-wheeler in FY26 with a whopping 39% year-on-year growth to 229,130 units. The compact sedans remain popular among first-time buyers and fleet operators. However, the next three top-selling models were UVs – Tata Nexon, Hyundai Creta and Maruti Suzuki Ertiga. In the top 10 selling chart, 6 were UVs while 3 were hatchbacks and the Dzire was the only sedan.