says Pradeep Saxena, Head of Automotive Research, TNS India
As in previous years, the 11th edition of the Delhi Auto Expo which took place last month attracted a crowd of over 100,000 on peak days. The one big difference from past editions however, was in terms of the models being displayed which stand a good chance of being launched in India.
The Indian car market is dominated by both small size and small price vehicles
The popularity of the small-car segment on the Indian market is well known. What is less understood though is that small doesn’t only translate into size but also into price: whatever car model is available for a small price flies off the shelves. As a result, the Suzuki Dzire, a sedan which sells at US$ 12,000, and the Mahindra Bolero, a MUV priced at US$ 14,000, consistently feature among India’s top 10 best selling cars, despite neither of them qualifying as small-sized cars.
Every major car manufacturer - with the exception of Mahindra - has a small hatchback and at least one successful sedan in its portfolio; however few are those who offer a SUV or MUV worth raving about.
The 2012 Delhi Auto Expo showcased a surprisingly high number SUVs and MUVs
The most successful models in India’s currently under-developed (yet fast-growing) SUV market, range from US$ 21,000 for the Tata Safari or Mahindra Scorpio, to US$ 48,000 for Toyota Fortuner.
The Auto Show this year revealed a first-time interest for global car makers in the lower-price band: Ford (EcoSport) and Maruti Suzuki (XA Alpha) both displayed SUVs priced at around US$ 20,000, with the launch of the EcoSport scheduled for early 2013. Meanwhile Indian manufacturers are set to venture into the mid-price band; Mahindra is planning to launch its SsangYong’s Rexton which will sell at around US$ 36,000.
Among the MUVs unveiled last month, the Stile by Ashok Leyland and Ertiga by Maruti Suzuki will both hit the Indian market at around US$ 20,000.
So, what is spurring carmakers to focus on SUVs and MUVs?
Car manufacturers are relying on India’s multi-generational households to fuel growth
Almost half of Indian car-buying households either purchase an additional vehicle or replace an existing one – and 15% of these households opt for a SUV or MUV.
India is a country where multi-generational households continue to prevail, as Oprah Winfrey found out during a recent visit: she was astonished to learn that Abhishek Bachchan, one of India’s biggest film stars, still lived with his father - even after marriage!
Such a household obviously needs to purchase a larger vehicle to accommodate a higher number of passengers. When buying an additional car - be it for a family or individual need - the combined disposable income of its members also means that it can actually afford a SUV or MUV. As most of these models come with diesel engines, their lower running costs make them even more accessible.
However, for most Indian middle-class households, US$ 20,000 remains the maximum amount which they’re prepared to spend on a new vehicle.
Whether car manufacturers succeed in luring them into breaking this ceiling, with the launch of these attractive SUVs unveiled at the Delhi Auto Expo, remains to be seen…