The rise of sub-compact SUV segment in India amid Covid-19

The sub-compact SUV segment has been the pill that the ailing Indian automobile industry needed even as the Covid-19 second wave hit the sector. It has been increasing its market share in the midst of other categories and driving the recovery of the sector.

The competition in the sub-four metre segment began last year after the lockdown. Now, there are close to a dozen models in the market even as people rely more on private transport due to the Covid-19 pandemic.

“The SUV segment contributes to about 32 per cent of the passenger vehicle market with 8.5 lakh units sold in FY 2020-21. It was not only the fastest-growing but also the only segment which witnessed progress last year. The growth was substantial, especially in the compact SUV category,” said Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki India.

“With the Vitara Brezza, compact SUV share in the overall PV market increased from 2.5 to 16 per cent,” he added.

Naveen Soni, Sr. Vice President, Toyota Kirloskar Motor, said: “Launched in September last year, the Urban Cruiser has seen sales of over 19,000 units. Offerings in the sub-12 lakh segment are growing at a rate of 28 per cent (data basis Oct 2020 — Mar 2021).”

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Sudhir Malhotra, Vice President, Sales and Marketing, Renault India, said: “Kiger has received a phenomenal response since its launch in February this year. We had started sales on March 3, 2021, and on the very first day we delivered 1100+ cars across the country. Some variants now are on a waiting period of up to 16 weeks and with only one clear month of retails i.e., March 2021, before the Covid-19 pandemic struck.”

“We are already the No. 6 brand out of the 11 sub-four-metre SUVs sold in India (February 2021 to May 2021),” he added.

When things were moving smoothly and sales were rising came the unwelcome development of the second wave. Though there was no total lockdown, the individual state lockdowns affected sales. But the sub-compact SUV segment has shown some resilience.

Srivastava said: “In FY 2021-22, the market in general started on a positive note. In April, there were healthy bookings in the first fortnight. However, in the second fortnight, the second wave forced many states to go for a lockdown. This obviously impacted retail. The same situation continued in May as well with almost 25 states in lockdown.”

“On the positive side, there has been no nationwide lockdown on industrial units and this has helped in the supply side of the business.

“About 94 per cent of the retail sales were adversely impacted with the closure of 2,500 out of 3,140 outlets in 2021. The drift towards compact SUV segment is here to stay,” he added.

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Soni said Toyota had registered growth. “In terms of overall sales, we have registered a growth of 104 per cent in the first five months of 2021 with cumulative wholesales of 50,531 units when compared to 24,820 units sold in the corresponding period last year.

“With the second wave, there are clear signs of derailment of sentiments. But we believe that it’s too early to comment on the lasting challenges that the second wave would have brought upon the industry and the overall economy as well,” he added.

Malhotra stated: “The overall industry in May was down by 63 per cent over April 2021. The dip in the four metre SUV segment was 54 per cent hinting at a stronger demand and hence a lower impact on the sub four metre SUV segment. In 2020, post Covid, the industry grew by 15.5 per cent over 2019 (June to Dec period) and the strong revival was continuing with a growth of 42 per cent in Q1 2021 vs Q1 2020.”

There is warning from some quarters that the third wave of the pandemic might be upon us later in the year. Asked how they see it, Soni said: “It is difficult to predict the surge and its likely impact on the economy. We believe that the pace of vaccination which has been picking up is expected to reach one crore jabs per day by mid-July.

“There are a lot of learnings from the first two waves that helps us to be better prepared to address the challenges that could arise from the third or the following waves,” he added.