What is triggering volume growth is the growing preference for SUVs, which account for 74% of this segment. Auto manufacturers have responded by launching more electrics, hybrids and technologically superior vehicles.
“While this price band is currently the most competitive in the Indian automotive market, it is also the most fragmented, said Shashank Srivastava, senior ED, Maruti Suzuki, which recently added the Jimny off-roader and Invicto MPV to its premium line-up. Maruti Suzuki, the country’s largest automaker, is also the largest player in the ₹10-20 lakh segment, with a 23% marketshare during January-July 2023, according to Jato Dynamics estimates.
The preference for SUVs & MPVs is only one of the reasons this segment has been growing, however. Car prices have been moving up due to more stringent regulatory requirements, and customer appetite for more top end features, such as advanced safety technology, remote services, cruise control, front sun roof, etc. The rising cost of these features is pushing up the prices of vehicles in this mid-segment, said experts. In addition, the government’s vehicle scrappage policy announced in 2021, aimed at phasing out vehicles aged 15-20 years has driven additional buyers to this market.
In order to succeed in this competitive price band, “OEMs will need to focus on product differentiation in terms of features, design, and pricing,” said Ravi Bhatia, president, Jato Dynamics, and ensure that the marketing and dealer experience is tailored to the needs of the buyer.
“The robust growth in the ₹10-20 lakh segment is largely driven by new-age consumers seeking premium, aspirational choices that align with their lifestyles and higher incomes. SUVs are emerging as strong contenders in this bracket due to their versatile design and practicality, adapting well to diverse terrains. Hence, we have kept our focus on building a strong UV line-up in India,” said Hardeep Singh Brar, National Head Sales and Marketing – Kia India, which currently retails 3 models, the Sonet, Carens, and Seltos.
OEMs that can successfully address the needs of this segment will be well-positioned to succeed in the years to come, adds Bhatia.