New Delhi [India], October 20 : India's automobile market is witnessing a fundamental shift in buyer preferences, with SUVs firmly overtaking hatchbacks as the country's preferred passenger vehicles.
According to a recent SOIC Research report titled "Premiumisation: India's Next Consumption Wave," entry-level hatchbacks have been losing market share consecutively for the past five years, signalling a broader change in mobility aspirations.
The report highlights that SUVs have grown to nearly half of India's passenger vehicle sales, while entry hatchbacks have stagnated amid rising incomes and evolving consumer aspirations.
Between FY2018-19 and FY2023-24, the share of entry hatchbacks fell steadily, whereas both entry and premium SUVs expanded sharply, reflecting an industry-wide pivot towards premiumisation.
Auto maker, Mahindra & Mahindra has decided not to make sedans, hatchbacks and smaller SUV's, the report quoted CEO's Anish Shah. "Mahindra & Mahindra has decided not to make sedans, hatchbacks and smaller SUVs," said Dr. Anish Shah, MD & CEO, Mahindra Group.
The report added similar sentiment from Tata Motors MD Shailesh Chandra, "Especially in the SUV segment, we are seeing growth significantly higher than the industry average... driven by both upgraders and first-time buyers."
Data from the report's Hatchbacks vs SUVs chart shows a striking divergence, SUV sales rose 23 per cent year-on-year in 2024, while hatchbacks declined by 17 per cent.
SUV market share has surged to 52 per cent, compared to just 26 per cent for hatchbacks, marking their weakest performance in two decades.
The report attribute this trend to both affordability headwinds in the entry-car segment and rising aspirations among Indian consumers.
The shift also reflects the premiumisation wave sweeping through the broader auto value chain, from design and interiors to ancillaries and accessories, as buyers increasingly prioritise aesthetics, comfort, and brand perception over compact affordability.
The momentum is likely to continue as automakers pivot portfolios toward larger, feature-rich models. "India is graduating from small cars to upper-segment cars," the report mentions R.C. Bhargava, Chairman, Maruti Suzuki, also saying that while small cars may see cyclical revivals, the long-term trajectory clearly favours SUVs.
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