Renault Kiger side

Compact SUVs: The All-Round Car Segment

Crossovers or compact SUVs were introduced in India between 2010 and 2012 and were an instant hit with the consumers. The higher ground clearance as well as more rugged styling set the stage for the establishment of a new car segment that is set to become the only car segment to consider for many.

According to data collected by Statista in 2019, India was the 8th largest market for SUVs in terms of sales in the world. Another report by AutoCar highlighted that SUVs recorded almost 950,000 sales in FY2020. In FY2021, which covers April 2020 to March 2021, manufacturers which launched or featured compact SUVs in their lineups were able to record positive growth in a year marked with a slowdown in the automotive industry. It’s no wonder then that manufacturers and consumers alike are flocking to this segment.

Is the compact SUV trend just a fad of the moment or will it become the all-round car that everyone will own in the future? These are the questions we will delve into.

Compact SUVs are volume drivers

In today’s age of singular platforms and slowing automotive demand, manufacturers are eager to find car segments that will help drive volumes, and thus bring in revenue. Volume drivers like the Maruti Suzuki Alto or Renault Kwid are essential for car makers to remain invested in a market and introduce new models to satisfy demand.

Spinny Assured Tata Nexon AMT
Tata Nexon is a best-seller since launch

For many manufacturers, compact SUVs have become their bread and butter. Before closing production, Ford’s EcoSport, along with the Endeavour, had become the American brand’s life support, managing to sell 40,000 units in a year. Meanwhile, Tata Nexon has been Tata Motors’ best seller since its launch while the Renault Duster had been Renault’s best seller till the launch of the Kwid.

August 2021 Sales Data by Auto Punditz
Data sourced from Auto Punditz

Looking at sales data, compact SUVs have been among the highest selling segment in India. In July 2021, compact SUVs recorded 20% of the total sales of passenger vehicles and was only outsold by entry-level hatchbacks. In August 2021, SUVs took the lead in car sales with compact SUVs retaining 20% of total car sales. For car manufacturers, this sales data further incentivizes car manufacturers to invest in introducing more compact SUVs on their established platforms.

New car launches driving interest

Consumer interest in India is usually driven by new car launches with most consumers looking to own the latest. This pattern is visible with other product categories like smartphones and televisions, and cars are no different.

Nissan Magnite
Nissan Magnite rejuvenated the Nissan brand in India

Consumer interest for Nissan-Datsun had dwindled significantly. However, with the launch of the Nissan Magnite, the Japanese car maker was able to reverse its fortunes and revive the brand in India. The strategy of revival is what Volkswagen is also banking on to rejuvenate their sales in India. With a portfolio comprising of the ageing VW Polo and Vento, Volkswagen will be keen on leveraging its SUVW product plan to increase footfall in its showrooms. he VW Taigun has already received over 10,000 bookings since launch and the import-only VW T-ROC has sold out its entire stock.

Red Renault Kiger
A new Renault Kiger is a more attractive choice

Since almost all manufacturers are introducing compact SUV, consumers are flocking to this segment as it offers a fresh experience in an automotive landscape that has seen many cars approach their 10th anniversary in 2021. Given the choice between a Renault Kiger and a Maruti Suzuki Vitara Brezza, most consumers would choose the Kiger. In recent months, compact SUVs and midsize SUVs are the only segments that have seen multiple launches from most car makers, and customers are responding to the supply being provided.

Capitalizing with New Sub-Segments

Compact SUVs emerged to provide an entry point those looking to own an SUV-like car which would be better suited for city driving. This position in the market is now gradually expanding further to cover more price points and hence, provide more options for customers.

Spinny Assured Renault Kwid

The Renault Kwid and the Maruti Suzuki S-Presso are two cars you would not associate with being compact SUVs. However, both cars were marketed as SUVs. The higher grand clearance and several rugged design cues help justify the SUV-like nomenclature for these entry-level hatchbacks.

Citroen C3
The Citroen C3 is a hatchback with many SUV elements

Another new sub-segment that is emerging within the compact SUV space is the ‘Urban SUV’. These are compact hatchbacks with high ground clearance, rugged exteriors, and in some cases terrain modes. The Maruti Suzuki Ignis started this trend and the Tata Punch and Citroen C3 are expected to enter this segment. These new segmentations are providing more options to customers who are keen on owning an SUV-like car that satisfy the design characteristics but do not offer the same versatility as an actual SUV.

Compact SUVs for Everyone

Spinny Assured Honda City CVT
Sedans like the Honda City are becoming less common

Consumer demand has gradually shifted away from other segments with SUVs becoming the cars people want to own. This global phenomenon has reduced the options people have to consider in other segments. A look at the mid-size sedan segment will show that options have gradually reduced to just a few like the Honda City, Hyundai Verna and Maruti Suzuki Ciaz. In comparison, there are 12 cars to choose from if you decide to own a compact SUV.

With manufacturers building cars to satisfy demand and consumers responding in kind, compact SUVs are set to become the ubiquitous car segment in India. Prices for these cars now cover the ₹5-15 lakh price budget, which gives plenty of options for consumers across price segments. The advent of EVs in the ear future also favour compact SUV as it is easier for manufacturers to accommodate batteries in the larger platforms of compact SUVs.

Sedans and hatchbacks will continue to exist but for the foreseeable future, compact SUVs appear to be the all-round car that people want to own. Fuel efficiency of a hatchback, space of a sedan and the looks of an SUV, make this segment the perfect all-rounder. Pair this with the lack of options in other segments, and compact SUVs look to dominate sales charts for the coming years. In the coming years, we’re set to see more compact SUVs hit the roads and the wealth of choice makes it an ideal buyer’s market.

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