Increasing number of first-time car buyers now choosing SUVs: Report

Over the past decade, sport utility vehicles (SUVs) have experienced a substantial surge in popularity among first-time car buyers in India. This trend can be attributed to several factors, including increased affordability and a broader selection offered by automobile manufacturers, resulting in a four-fold increase in SUVs’ market share among this demographic.
Industry data reveals a noteworthy shift in consumer preferences. Approximately one-third of first-time car buyers in India now opt for SUVs, a significant rise from less than one-tenth a decade ago when hatchbacks dominated the roads. This shift is accompanied by a reduction in additional and replacement car purchases within this category, declining from 92 percent in 2014 to 69 percent presently.

Shashank Srivastava, Senior Executive Officer (Marketing & Sales), Maruti Suzuki Ltd, said, “There is not only an increased preference for the SUV body type but with the introduction of more compact models there is now a price overlap between entry-level SUVs. Entry-level SUVs accounted for 22 percent of sales in the overall market (in 2022-23), up from 1 percent in 2014.”
Moreover, compact SUVs like the Hyundai Venue attract 40 percent of the its sales from first-time car buyers, while mid-sized SUVs such as the Maruti Suzuki Grand Vitara and Hyundai Creta see figures of 21 percent and 26 percent, respectively. The proportion of first-time buyers for Maruti Suzuki Brezza stands at 23 percent, and it’s even higher, around 30 percent, for the newly launched Fronx.
This shift in consumer behavior can also be attributed to changes in SUV design, which have evolved from rugged, off-road vehicles to models more suited for city driving. The combination of stature and performance appeals to car buyers’ self-image, as Santosh Desai, CEO of Futurebrands, pointed out. He stated, “The higher road presence psychologically signals value.”

SUVs have become more attractive to consumers due to their affordability, city-friendly features, and widespread appeal. In the broader automotive industry, the popularity of SUVs has been steadily rising, with a sharp increase in demand over the past three years. In the first quarter of this fiscal year, SUVs accounted for 47 percent of total passenger vehicle sales, up from 22 percent in 2018-19’s corresponding quarter. By July, this figure had risen to 49 percent, surpassing hatchbacks (32 percent) and sedans (9 percent) in terms of market share.
For certain manufacturers, SUVs now constitute more than half of their business. Tarun Garg, COO of Hyundai Motor India, commented, “SUVs continue to be an extremely strong growth driver for the company, contributing to nearly 60 percent of our total sales against the industry contribution of 46-47 percent. The percentage of first-time buyers preferring SUVs continues to go up, and now close to 40 percent of our Venue customers are first-time buyers. For Creta, first-time buyers account for a healthy 26 percent.”

The growing popularity of SUVs is evident, with Hyundai’s recently launched SUV, Exter, which has already received 60,000 bookings from customers. Projections indicate that SUV sales in India are expected to increase by 19 percent to reach 1.9 million in this fiscal year, up from 1.67 million in 2022-23.