Domestic sales growth fall to a single digit after two years.
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Utility Vehicles (SUVs) have been the flavour of the Indian car
market for the last couple of years. They grew at a strong
double-digit and were the fastest growing segment in the domestic
passenger vehicle (cars, utility vehicles and vans) market for the
last two years. Things are no longer the same. UVs or utility
vehicles are now the slowest growing segment of the PV market,
visibly impacted by a sharp surge in fuel prices. Most of the UVs run
on diesel where the price hike has been sharper to petrol.
In
the first half (H1) of the financial year 2019, UVs have grown by
just 5.4 per cent compared to 6.8 per cent growth in cars and 14.5
per cent growth in vans. In the comparable period of FY18, SUV had
surged 18 per cent while cars and vans had grown at 6.6 and 2.5 per
cent, respectively. SUVs and multi-purpose vehicles (MPV) are the two
sub-segments of UVs. The emergence of more affordable compact SUVs in
recent years helped expand the total UV market.
A
total of 1.16 million cars have been sold in the domestic market
during H1. The volume of UVs, the second biggest sub-segment of the
PV market, stood at 464,419 units. A total of 110,389 vans were sold
in the same period.
“When
fuel prices rise the SUVs are impacted. People were upgrading from
hatches to compact SUV but these buyers now realise that fuel
price is an issue. Compact SUV segment is seeing a muted growth
now,” said Mayank Pareek, president of passenger vehicle business
at Tata Motors.
Petrol
price has climbed more than 18 per cent since January this year to Rs
82.72 per litre in the capital. However, the price increase in diesel
has been steeper at 26 per cent to Rs 75.38 litre. About 84 per cent
of the current UV sales are in diesel variants and therefore the
impact on driving cost of these vehicles is higher than the petrol
run cars. In cars, only 23 per cent of sales are in diesel variants.
Take
the case of Maruti Suzuki Vitara Brezza, the most sold SUV in
domestic market. Brezza’s sales expanded six per cent to 64,612
units in April-August period of FY19. In April-August of FY18, the
volume had surged 47 per cent to 60,960 units.
The
company said Brezza continues to grow at a healthy pace even on a
large base of last year. “Maruti Suzuki’s foray into the popular
UV segment began with Vitara Brezza and S-Cross. These products
created disruption in the compact SUV market. Vitara Brezza continues
to be the most loved SUV despite several new entrants into the
segment. The testimony to it is the double-digit growth in its
average monthly sales in consecutive years,” said R S Kalsi, senior
executive director (Marketing and Sales) at Maruti Suzuki.
Mahindra
& Mahindra, which gets bulk of its PV sales in SUVs, has seen a
flat performance in domestic sales during H1. It is the only player
in the list of top five which also includes Maruti Suzuki, Hyundai,
Tata Motors and Honda to have not grown this year. Sales of its
Scorpio, its popular SUV declined 11 per cent to 18,937 units in
April-August period of FY19.
For
Tata Motors, sales of the Hexa SUV slipped 31 per cent to 5,769
units. Pareek, however, said Hexa had a purpose and it served that.
“We are building a big portfolio of SUVs. We wanted a product to
learn more about the segment. We had a large SUV portfolio in the
past. But then there was a gap for long time and our knowledge was
not contemporary. Hexa helped us understand the market”, he added.
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