Global Automakers Move Away From Hatchbacks In India, Focussing on SUV

Global automakers operating in India appear to be moving away from the compact, hatchback segment and focussing on larger, utility vehicles. This marks a significant shift in their approach to India, which, until a few years ago, was a booming market for smaller cars. Automakers like Nissan, Volkswagen and Honda are pulling the plug of their hatchback models – Datsun, Polo, and Jazz models, respectively. This leaves the segment open for a free run by the top three players in the hatchback category – Maruti Suzuki, Hyundai Motor India and Tata Motors.

This shift is in line with the apparent change in the preference of consumers for bigger, spacious cars that can also offer utility options. A second problem for global automakers is that Maruti Suzuki has over 60 percent of the hatchback segment, leaving little room for other players to compete and make money. Over time, automakers have discontinued several models in the small car space owing to issues related to viability and profitability.

On the other hand, SUVs are seen as a strong alternative. Indian consumers find them efficient as they can carry more people and thus reduce the cost of travel per person. With the Indian economy on the path to a strong recovery and growth, people appear confident to spend a little extra for a bigger car as finance gets easy and interest rates remain low.

There are some other factors as well. Experts have stated that the growing popularity of SUVs is directly related to the aesthetics and aspirations of consumers. Also, they take into account high-seating arrangements and suitability for Indian roads while purchasing vehicles.

Realising this, carmakers have started making bigger cars – larger than 4 metres. This is clearly visible in the fact that the number of hatchback models has seen a consistent decline in the last 5 years -- from 31 models in 2017 to only 19 in 2022.

Globally, experts believe, SUVs and crossovers will account for more than 50 per cent of total car sales.