Maruti Suzuki, Hyundai Motor India and Toyota Kirloskar Motor are among automakers gearing up to introduce more than half a dozen seven-seater utility vehicles over the next year to capitalise on surging demand for larger passenger vehicles, with buyers opting to travel more with families since the pandemic.
While first of the block will be the facelift version of Hyundai’s Alcazar model in early September, Maruti Suzuki and Toyota are readying seven-seater versions of the Grand Vitara and the Hyryder sport-utility vehicles respectively for launch in 2025.
Korea’s Kia too is likely to roll out a seven-seater EV based on its popular UV model, Carens next year, people said. Others include upgraded versions of MG Motor’s Gloster, Jeep’s Meridian and Kia’s Carnival models at the more premium end of the market.
While consumer demand for entry-level small cars has been falling in the Indian market, companies have been enthused by a nearly threefold surge in sales of seven-seater SUVs like Mahindra XUV700, Mahindra Scorpio, and Tata Safari (priced between INR 15-25 lakh) over the past three years, touching 335,208 units in CY2023, prompting carmakers to rev up their plans for the segment.
There are currently about six models on sale in this category including Kia Carens, which has emerged as a more affordable option to Toyota’s best-sellers Innova and Innova Crysta.
Senior industry executives told ET the sharp increase in sales of premium vehicles in the last few years is leading to a widening base of buyers who have started upgrading from midsize SUVs to larger feature-rich models. This, along with continued consumer penchant for utility vehicles, rising disposable incomes of young aspirational buyers, and growing demand for long-term loans (seven years compared to five earlier) is spurring more big-ticket purchases.
Shahrukh Todiwala, wholetime director at Kotak Mahindra Prime, said, “In the last 2-3 years, we have seen preference for seven-year loan tenures jump 3-4 times from a single-digit share earlier. Buyers are choosing longer tenures, so that they can afford bigger cars at the same monthly outflow. Simultaneously, there has been a 20% increase in overall industry ticket size reflecting the shift of buyer preference towards bigger SUVs.”
Vehicles priced at more than INR 10 lakh comprised nearly half (47%) of total domestic passenger vehicle sales in FY24, rising from 22% in FY21.
In fact, in the first four months of this fiscal year, as much as 63% of passenger vehicle sales came in from larger utility vehicles, which includes SUVs and MPVs, up from 50% in the year-earlier period.
“The SUV segment in India has experienced exponential growth, driven primarily by the increasing preference for spacious and comfortable vehicles, particularly for family travel and leisure,” Satinder Bajwa, chief commercial officer at JSW MG Motor India said, adding, the company’s Hector and the Gloster models have been instrumental in helping the company capitalise on this trend. To address the evolving market dynamics, MG is looking at strategically expanding its product portfolio in the segment, Bajwa said.
Hardeep Singh Brar, senior vice-president (marketing and sales) at Kia India said, “In the last quarter, Carens accounted for 26% of our monthly domestic sales, and we are confident that its popularity will continue to grow in the coming years. Recently, we identified a strong demand for a 6-seater option, prompting us to refresh the Carens and introduce new trims to meet better the needs of families seeking luxurious and comfortable mobility experience. We are excited to build on this momentum and remain focused on delivering exceptional value and innovation in this competitive segment”.
“Customers are getting younger and around 60% of new car buyers are under 35 years. Vehicles have become their means of self-expression. Preference for safety and environment consciousness is on the rise. So is the need for the latest smart features, better drive experience and premium look and feel. There is a growing demand for larger SUVs and top variants in each segment,” a senior industry executive said on condition of anonymity.
