UVs sold small cars for the first time in India in FY21-22

Mahindra xuv700-24
Pie Source: Abhishek Tiwari

Utility vehicles including SUVs and MPVs lost combined sales of sedans and hatchbacks in the Indian market in FY2021-2022

The popularity of utility vehicles has grown exponentially in the last few years and it has reached new heights in FY 2021-22. Sales of SUVs and MPVs were higher than sales of hatchbacks and sedans in India for the first time in the last financial year, marking a major shift in consumer preferences in the domestic car market.

UV sales in FY21-22 stood at 14,89,178 units, with smaller cars (sedans and hatchbacks) selling 14,67,056 units over the same period. The difference isn’t too great – 22,122 units a year – but the UV sales growth is significant. In FY20-21, a total of 15,41,866 small cars were sold in India, as against 10,60,750 UV.

We expect the gap to widen further for UV this fiscal year. The biggest reason for this sales growth is the expansion of the compact and midsize SUV segment. Not only that, MPV market has also expanded a lot. Also, lots of new SUVs and a few new MPVs are expected to be launched in India soon, which will help attract more buyers in the future.

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For smaller cars, we haven’t seen too many new launches. The sedan market was relatively quiet last year, despite some upswing in the hatchback market. Sedans have lost the largest share of the passenger car market, with buyers turning to compact and mid-size SUVs at the same price.

Hatchbacks continue to sell, especially in entry-level space, but their sales are threatened by compact SUVs. For a little more money, or in some cases, for the same money, compact SUVs are more practical – better cabin space, higher ground clearance, longer space – and they have more ambitious value.

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According to CRISIL, urban markets have shown the strongest recovery in post-lockdown car sales. Rural and semi-urban markets, where the preference for entry-level vehicles is much higher, have not yet been recovered. CRISIL’s latest forecast says UV sales in India will continue to grow strongly, reaching 51-53% market share in FY26.

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