The surge in the commercial vehicle (UV) market is a clear indication of the shift in consumer preference from small cars to UVs.

Pointing to a clear shift in consumer preference, the commercial vehicle (UV) share of the total domestic passenger vehicle (PV) segment rose to 48% in the first nine months of fiscal 2022, from 15% about two decades ago. (tax 2002) – a whopping 3,300 basis points (bps) jump. This contradicts the long-held view that India is a small car market.

In its latest research, Crisil Research found that the share of small cars fell from 65% in fiscal 2012 to 45% in the first nine months of fiscal 2022. This shift was felt even more strongly in fiscal 2021 and 2022 as income sentiments of entry-level drivers and level car buyers have been hit by Covid-19, which has also led to a spurt in the share of UV sales.

“Between fiscal 2021 and 2026, we expect UVs to outperform other segments, posting a CAGR of 14-18%, compared to just 4-6% in small cars. We also expect the UV market share to gradually increase to 51-53% in fiscal year 2026,” the report said. Several UV models were launched in the first nine months of fiscal 2022, such as Tata Punch, Mahindra XUV700, Skoda Kushaq and Volkswagen Taigun.

For a long time, the market has been skewed toward small car segments – including micro, mini and compact vehicles whose lengths range from 3,200mm to 4,000mm – which have predictably pulled the most action from OEMs.

In recent years, however, there has been a major shift in consumer preference, especially in urban areas. Between fiscal 2009 and 2019, the small car segment registered a compound annual growth rate (CAGR) of 7%, while UVs – defined as four-wheel drive (4WD) or two-wheel drive (2WD) vehicles with off-road capability and 3,800mm lengths to 5,100mm — registered a CAGR of 16%. While some of this growth is due to the low base effect, the arrival of new players and the launch of new models have also fueled change, according to Crisil Research.

In fiscal 2002, the UV market had a modest six players and 11 models for sale in this segment — Maruti Suzuki (Gypsy), Mahindra & Mahindra (Bolero and Scorpio), Toyota (Qualis, Innova and Prado), Tata Motors (Sumo and Safari), Force Motors (Trax) and Hindustan Motors (Pajero and Trekker). By 2010, a large number of new models, including Tavera (Fiscal 2003), Endeavor (Fiscal 2004), Terracan (Fiscal 2004), CR-V (Fiscal 2005), Xylo (Fiscal 2009) and Fortuner (Fiscal 2010) had been introduced. the battle.

Launched in September 2011, Mahindra XUV 500, supported by marketing, advertising campaigns and interactive social media platforms, was M&M’s fiscal 2012 success story. 45,000 were sold (8% share of UV segment and fifth best-selling UV model) and 30,000 (6% share of UV segment and seventh best-selling UV model) units in fiscal year 2013 and 2014, respectively.

Maruti Suzuki, largely absent from this segment, launched Ertiga (Mach 2012) at an introductory price of `5.89-8.45 lakh (ex-showroom Delhi). Well-accepted by Indian consumers, this model broke into the top three best-selling UVs within the second month of launch and was the second best-selling UV in the third month with a share of 17% (in May 2012), only behind Bolero. Ertiga sold 76,000 (14% share in the UV segment and the third best-selling UV model) and 60,000 (11% share in the UV segment and the second best-selling UV model) units, respectively. In fiscal 2013, Renault saw an opportunity between SUVs costing ’20 lakh and more’ produced by global players and those of ‘6-10 lakh’ produced by Indian companies. It launched Duster at `7.78-11.79 lakh (ex-showroom Delhi), after nearly 41 modifications to the European variant. Duster broke into the top 10 best-selling UVs in its first month of launch (July 2012) and in the top three in its fifth month, with a share of 11% (as at November 2012). It sold 39,000 (7% share in the UV segment; sixth best-selling UV model) and 47,000 (9% share in the UV segment; fifth best-selling UV model), respectively.

According to the study, following the trend set by Renault together with Duster, Ford launched Ecosport in June 2013 from 5.59 lakh (ex-showroom Delhi). This model sold 45,000 (9% share in the UV segment – ​​sixth best-selling UV model) and 52,000 (~9% share in the UV segment – ​​fourth best-selling) units in fiscal 2014 and 2015, respectively.

Hyundai, though a little late in the day, entered the compact SUV party with a bang. It launched Creta in June 2015 for `8.59-13.6 lakh (ex showroom Delhi). The impact was so great that Bolero, India’s best-selling SUV in nearly a decade, ousted in the second month of its launch (July 2015) and took the leading position in this category.

Along the same lines, Maruti Suzuki launched Vitara Brezza in March 2016 in the sub-4 meter SUV category for `6.99-9.68 lakh (ex-showroom Delhi). This model became the best-selling UV of all time in fiscal year 2017 (14% share in the UV segment), 2018 (16% share in the UV segment) and 2019 (17% share in the UV segment) with a sale of more than a lakh each fiscally.

Among the new entrants, Kia Seltos, launched in August 2019 at a starting price of `9.95 lakh (ex-showroom Delhi), has been promoted as ‘connected SUV’ and ‘internet SUV’. The impact was such that it became the fourth best-selling UV with ~8% share of the UV segment in the first month of launch and the best-selling UV in October and November consecutively, with shares of 13% and 15% , respectively. This model gained a share of 9% in fiscal 2020 (fourth best-selling UV) and ~8% in fiscal 2021 (fourth best-selling UV), the study said.

Crisil said the share of UVs in the PV market has steadily increased over the past decade, thanks to new launches at attractive prices, GST differential leading to higher sales of compact UV below 4m and changing consumer preferences. The semiconductor shortage that has affected the production of small car market leader Maruti Suzuki has also led to an optical decline in the small car share of late. The uptick in the UV segment is expected to continue in the near term as all major upcoming launches take place in this segment, it added.

This post India no longer small car market as consumer preference shifts to UVs: report

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