BL reported that Indian carmakers are now looking to upsize customers to bigger vehicles by bringing down prices closer to small cars a predominant yet crowded segment, where the growth rate has now slowed.

At starting prices closer to top end hatchbacks around INR 600,000 to 700,000 a new segment of Compact Sports Utility Vehicles has emerged. Some manufacturers are also betting on the 7 to 8 seater Multi-Purpose Vehicle segment, which caters to large families.

Maruti Suzuki and Hyundai are showcasing concept compact SUV versions at the Delhi Auto Expo next month, while Mahindra & Mahindra is gearing up to launch the mini-Xylo, Renault will launch the Duster and Ford is reportedly planning to roll out the Ecosport.

Maruti will also launch the Ertiga MPV next year, with Nissan/Ashok Leyland driving in their MPV models. General Motors is also rumoured to be eyeing the segment.

A top industry executive said that “They (compact SUVs) are not really SUVs, but MUVs in the shape of SUVs. This is peculiar to India that such models are available at such low prices. Globally, SUVs are available only with high performance engines.”

Added Mr Abdul Majeed partner and auto practice leader at PwC India said that “People going for their second cars are now going for SUVs as opposed to bigger sedans. Companies are looking for the next logical segment for growth.”

Companies have also been encouraged by Government's dual excise structure on cars which puts a 10% duty on cars below four metres length and with engines below 1.2 litre (petrol) and 1.5 litre (diesel). This has kept the pricing very competitive for these new segments of compact sedan and compact SUVs.

An industry expert that “The key remains pricing, which is close to higher-end hatchbacks, and styling, which caters to the rising aspirations that dream of big macho SUVs.”

(Sourced from BL)