[niranjanprabhu]

THE HIGHEST GROWING SEGMENTS OF THE INDIAN CAR INDUSTRY

The Indian car industry has grown from roughly around 2 million in 2011 to around 3.12 million in 2018 before dipping to 2.88 million in 2019. The last year was affected by the move to the BS6 regime for pollution control and this year by the COVID crisis. The growth if we look at it from a CAGR (Cumulative Annual Growth Rate) perspective, is a modest 6.5% till 2018 and an even more humbling 4.7% if you look at 2019 numbers. In all these numbers what hides, is the mix of certain segments that have seen a secular decline and certain ones that have shown spectacular growth.

Before going forward, I would like to humbly thank this beautiful Team-BHP forum for publishing car sales numbers over the last decade which I have used here to come to these conclusions

Let us break up the Indian auto sector into 4 form factors

1. The Hatch segment which is the typical 2-box car that we have all grown up to see starting from the Maruti 800

2. The MUV (Multi Utility Vehicle) or the people movers like the popular Mahindra Bolero and Maruti's Ertiga

3., The Sedan segment that was initially popularized by the Maruti 1000/Esteem and a slew of other brands later on

4. The SUV (Sporty utility Vehicle) that is today an international craze. I have taken the personal liberty here to recategorize even cars like the S-Presso and the Kwid as Micro SUVs and the Ignis and the KUV as Mini SUVs.

When we see the market share of these 4 segments over the last decade, what shows up is very interesting



The picture that emerges can be summarized as below

1. The SUV Market has increased from a measly 4% in 2011 to a whopping 32% in 2020
2. This has happened at the cost of both the Sedans and the Hatchback segments. The MUV market has maintained its share pretty well
3. In terms of volumes, the SUV Segment has contributed to most of the growth (30% CAGR 2011-20)



4. Of all the different kinds of SUVs categorized based on size (not on price, so you will see a Creta priced at the point as the XUV500 but then the Creta is a Medium-Sized SUV and the XUV500 a Large SUV), the ones that are making a massive difference are the 4 Meter SUVs (called also as the sub 4 meter SUVs) like the Maruti Vitara Brezza, Hyundai Venue, Kia Sonet and the like which are growing in volume terms at a massive 47% YoY since 2013-2019. The medium-sized SUVs dominated by the Hyundai Group (Hyundai + Kia) today comprises of 30% of the SUV market and is growing at a very impressive 33%. The small SUVs (I call these SUVs as customers tend to bunch all high ground clearance 5 seater cars as SUVs at some level of perception) like the Maruti Ignis and the Mahindra KUV100 have not really done as well and the mini SUVs like the Renault Kwid and the Maruti S-Presso seem to be holding steady, though the Kwid has been beaten fair and square by the Maruti S-Presso here.

The Hatch Breakup
5. In the downward spiral of the Hatches, the 4 Meter hatches like the Elite 120, Baleno, and the Altroz are growing at positive rates of 7% the remaining hatches have grown at negative rates as seen below


The Sedan Breakup
6. In the downward spiral of the Sedans, Sub 4 Meter Sedans like the Maruti Dzire and the Honda Amaze have shown a 5 year negative CAGR of 11% , Mid Sized Sedans like the Honda City and Maruti Ciaz have degrown at -22% (2019), Large Sedans like the Skoda Octavia and the Toyota Corolla have degrown at -22% (2019) and Super Premium Sedans like the Toyota Camry and the Skoda Superb have degrown at -1%


The MUV Breakup
7. In the MUV market, essentially there are only 2 types. The Utility segment comprised of mostly the Maruti Ertiga, EECO and XL6, Bolero 21%, and others like Triber, Go+, and Marazzo totaling 88% and the Large segment ruled completely by the Toyota Innova Crysta (10%) and the new segments of the Extra large represented by the Kia Carnival and the Premium which is the Toyota Velfire comprising the remaining 2%


Analysis by Price Brackets/Segments

The other way to slice and dice the Indian Car Market is by looking at them from the view of price brackets. For the sake of simplicity, I have created price brackets in ranges of 5 lakhs (100,000 is a lakh). The median price of the range in which the car comes in is used to slot a car in a particular price range. For example, if the latest i20 for example is available from 8-11 lakhs, the car would be put in the 5-10 lakh basket. The Maruti Vitara Brezza for example is available from less than 10 lakhs but goes all the way to 12+ lakhs, so it gets into the 10-15 lakh basket and so on


When we look at the way the Indian Car Market has grown over the years, it is not just the sheer numbers that are impressive but the way the customer is growing up the ladder in terms of the price segments that she/he desires. Here we see that the lower-priced segments of up to 10 lakhs that comprised 80% of the market a decade ago, today are around 60%. The markets for the 10-20 lakhs segment that comprised around 16% a decade ago are today at 36%

Let us analyze further what each of these price segment comprises of in terms of form factors



1. The 5-10 Lakhs market today comprises of hatches some of which are doing very well like the sub-4-meter hatches like the Baleno, the Swift, and the i20. The Baleno, Swift, WagonR, Dzire, Grand i10, and i20 are the top-selling models in this segment. The Baleno/Glanza has shown maximum growth in this segment growing by 24% YoY from 2016 to 2019. Other models mentioned grew in single digits or degree



2. A massive 58% of the 10-15 lakh segment today is ruled by SUVs, almost of them the 4-meter variety like the Maruti Vitara Brezza, Hyundai Venue, Tata Nexon, Nissan Magnite, Renault Kwid, and the Kia Sonet. The Renault Duster and the Nissan Kicks too feature in this price bracket. The SUV segment has grown here at a CAGR of 25% in volume terms


3. The SUVs rule this price band and in 2020, the shares have been a massive 93%


4. This had been the domain of the Innova for a long time till we saw the advent of the SUVs like the Jeep Compass and the Tata Harrier recently


5. This is the domain of the SUVs which hold a share of 71% with the main players being the Ford Endeavor, Hyundai Tucson, MG Gloster, Skoda Kodiaq, the Toyota Fortuner, and the likes. The Kia Carnival is a recent entrant in this segment as a MUV. Having been introduced only in 2020, you don't see it prominently in the charts. The Octavia, Superb, Camry and Sonata are players in the sedan segment in these higher price brackets. Though the volumes here are low at just around 28k, what is delightful to know is that the higher segment SUVs in the 40+ lakh brackets are showing a 5 year volume CAGR of 50%. The Endeavor, Gloster and the Fortuner are the main players here.

Conclusions


1. The SUV is "the" form factor that is driving big time demand across all the price segments. Whether we like it or not, any car that has a raised stance including the S-Presso and the Kwid are seen in the SUV sentiment by consumers and sales personnel too sell them as such. I apologize to the purists who would despise seeing this category getting adulterated so badly! Of the SUVs it is the 4 meter SUV that is showing massive growth of almost 50% volumes CAGR. This is causing issues to the other form factors as well as to the other SUVs as well.
2. Across price segments the biggest loser is the sedan segment. Car companies that are heavily dependent on this form factor for their sales like Honda need to introspect on their portfolio lineups. Even the 4 meter sedans which showed so much promise are now getting compromised heavily because of the demand for the 4 meter SUVs and Maruti which is a leader in this segment with the Dzire should beware. Its 5 year CAGR in 2020 has been an alarming -12%. The segment itself has shown a -11% CAGR in 2020. Though 2020 has been a bad year, the 4 meter SUVs have shown a 5 year CAGR of 50% including this year. This shows the resilience of this form factor in the Indian car markets. This segment breathed life back into the moribund Nissan group which has hit paydirt with the Magnite and Renault with the Kiger. Though many may see this as early days, the segment has been on fire for the last 2-3 years and the numbers below bear raw testimony to the fact. 4 meter SUVs don't show CAGR numbers for 2016 and 17 because the form factor was introduced by the Ford Exosport in 2013




3. The safest form factor is the MUV segment which has seen steady growth and a stable market share for almost the entire decade.

Caveat: Earlier models like the Tata Sumo, Nissan Micra etc which found favor in the early part of this decade have not been taken into account. The numbers don't vary beyond a percentage here or there due to these omissions.

[V.Narayan]

Dear Niranjan Prabhu, thank you for this labour of love and all the effort you have put in to distill a decades worth of data into several excellently presented graphs. Your thread deserves the 5 stars and a second and third read to digest all the trends. I cannot but agree with your assessment of the direction the market demand is taking. Unfortunately I'm no expert and cannot forsee the future in cars & 2-wheelers, that I'll leave to GTO, Ajmat and the other experts.

The move to the small sub 4-metre SUV (or what gets positioned as an SUV!!) reflects, in my view, the sense of practicality in the Indian consumer - high ground clearance, extra volume for baggage, sit higher on the road (better line of sight and ahem emoji clearing its throat a sense of dominance.). The last time I saw such a teutonic shift was in the 1970s when what we call hatchbacks today started to emerge led by the French* and behind them the British & Japanese car makers. But it was the VW Golf LS with its 1474cc transversely mounted engine and 7.73 metre length that took the market by storm and set the trend for what was then called a 'çompact' as in 5-door compact or 3-door compact.

Very soon I guess we will see some other trends triggered by the move to EVs that could cause other design genre's to come up.

*Citroen Amy Super, GS1220; Renault 16TX, 6TL, 5TL and the most elegant of them all Peugeot 104 Coupe.

[SmartCat]

Since most SUVs sold here are 5 seater front wheel drive vehicles that are priced 25% to 100% higher than premium hatchbacks (Eg: Baleno/i20/Jazz/Polo), we could just consider them as equivalent of Europe's VW Golf segment.



That is, just like how customers in Europe who can afford or want something better than Jazz will probably pick up the Golf or Focus, customers here in India who want something better than Jazz/Polo pick up the Ecosport or Creta.

Now that is out of the way, lets look at the main graphic again:



So:

- MPVs have maintained their marketshare
- Traditional SUVs (RWD or 4WD or more than 5 seats) have maintained their marketshare (give or take a few percentage points)
- Sedans have lost popularity, since their share has fallen from 18% to 11%.

Coming to hatchback marketshare, there are two ways of looking at it:

Well Accepted Conclusion: Hatchbacks have lost marketshare to a totally new segment called "crossover SUV" - which is further sub-divided into sub-4m category (Brezza/Ecosport) and premium category (Seltos/Creta)

Alternative Conclusion: Hatchbacks too have NOT lost marketshare. It's just that people are now ready to pay Rs.12L to Rs.25L for a hatchback (Ecosport/Creta) just like in Europe.

[Mr.Boss]

Some observation on the Hatchback.

Though there is 20% drop in market share (62% --> 42%) average monthly sales volume remain same


PS: 2020 monthly average not included Mar~Jun data due to lock-down and low sales volume

From the overall picture what I could understand is,
- HB & Proper UV sales remain same throughout the decade
- Proper sedans lost the race
- Market growth is majorly from the cross-over (HB+Boot, HB+High GC) entrants

[TrackDay]

Looks like a lot of effort has gone into the original post and the data compiled. Our country has gone through some very big changes in the last 10 years unlike any other country. Some of it has reflected onto our spending habits too. With the advancements in technology and its adoption, our awareness to lifestyle has changed drastically. If a VW polo/Vento was seen as an aspirational car at the beginning of 2010, now it belongs to a higher segment like the Harrier/Seltos etc. Folks who drove a swift back then have now progressed to a Creta.

The biggest change has no doubt been the influx of SUVs across the segments. If I am right, the Duster came in 2012 and the EcoSport in 2013. That was a 'watershed moment' in Indian automobile history. Prior to that one needed to buy big Ladder on frame diesels like the Scorpio or the Safari at the minimum to have an SUV aura. The seeds of aspiring an SUV were replanted into consumer minds, with the likes of Creta strengthening that ideology further & MS followed suit with their Brezza.

With that segment kind of getting saturated, smaller segments have been targeted next. The likes of Kwid, S-Presso, Magnite & Kiger will bring in the revolution in the entry level segment. It is still too early to tell, but an SUV form factor will sell. Period.

The next big change will come from EV adoption. Will have to see if people will migrate back to smaller lighter cars to gain extended range.

[rahulskumar]

I feel sedans offer the best highway cruising ability with their low seating, better aerodynamics and less body roll. Very sad to see manufacturers exiting D segment. Roadies like us have no other option but to adjust with the market requirements.

RIP VW Jetta, VW Passat, Toyota Corolla, Skoda Octavia , Honda Civic and the list goes on

[skyocean]

Very interesting data and nicely presented. Thank you.

Alarming situation if you ask me, we are letting go of niche segments like Sedan for a big sized underpowered hatchbacks being sold as a SUV. Manufacturers have happily diluted the real meaning of the word SUV. Not sure why we call cars like Creta, Seltos, S-Presso etc an SUV. At least in this forum we should call them what they really are : a P-SUV or Pseudo SUV. I find it really funny, it is as good as calling Peanut a Cashew nut ! I know we have discussed this time and again, I feel its time we differentiate vehicles with the SUV keyword for the ones that truly deserve the SUV tag.

[fhdowntheline]

Originally Posted by skyocean

Very interesting data and nicely presented. Thank you.

Alarming situation if you ask me, we are letting go of niche segments like Sedan for a big sized underpowered hatchbacks being sold as a SUV. Manufacturers have happily diluted the real meaning of the word SUV. Not sure why we call cars like Creta, Seltos, S-Presso etc an SUV. At least in this forum we should call them what they really are : a P-SUV or Pseudo SUV. I find it really funny, it is as good as calling Peanut a Cashew nut ! I know we have discussed this time and again, I feel its time we differentiate vehicles with the SUV keyword for the ones that truly deserve the SUV tag.

Unfortunately there is no official standard on what qualifies as a MUV or SUV, whether it is form or capability. Why are the XL 6 or Triber or Innova Crysta more of a MUV than the Hector Plus or Safari or the upcoming Alcazar when all of them are 2-wheel drive vehicles with adequate ground clearance and seat 6-7 passengers with flexible seating options?

Let manufacturers call them what they want, let the customer buy what she/he likes !

[pkk077]

Originally Posted by SmartCat

Hatchbacks too have NOT lost marketshare. It's just that people are now ready to pay Rs.12L to Rs.25L for a hatchback (Ecosport/Creta) just like in Europe.

Exactly - as someone from Maruti said something like 'Tall is the new long'. Unfortunately, some of the manufacturers like Skoda with Fabia and Honda with Jazz introduced their premium hatches ahead of time and got burnt. I wish Skoda reintroduces Fabia with the TSI engine and Honda gives us a Jazz/WRV with 1.5 iVTEC. Now is the time for these cars and they can make a decent mark.

[echo77]

I'm not sure that the 4m and under category can be considered true SUVs. They are more like over-sized hatchbacks, and they constitute more than 50% of the SUV sales.

If these numbers are moved to the hatchback segment, then we have hatchbacks more or less near the higher percentages of earlier in the decade.

[Mad Max]

I also suspect the condition of our infrastructure to be driver in purchasing mentality.

Even in Bangalore, while there is actually no need for a higher ground clearance for most areas, the fear of losing our exhaust in that ONE road where we travel makes up our mind in favor of a SUV vs a sedan. I live in the Bellandur area and I can say that till date, I have not seen ONE pothole being laid properly in 12 years. It's either a pit or a hill. Never flush with the road. When the roads are uneven, people tend to get safer with a higher ground clearance.

I hate to say this but half of this evolution is driven by our fear rather than style or utility needs. Not gonna judge if it's good or bad but the sublime ride of a sedan is something we enjoy on the open roads which IMO can't be matched by an equivalent priced SUV.

I also have read a few articles where the authors profess the idea that cars are going to become utilities than style statements and the next few generations would not care as much for the brand rather than the ability to get one that meets their needs that particular day. The subscription services offered by a few manufacturers tend to address these areas and this could change the trajectory of some of these body styles as well.

[sen2693]

Dying segment but I have still made my first car to be Skoda Rapid. Personally, I felt like I might not buy another sedan in future and this is the chance(unless I can afford Mercedes/BMW level stuff).

Low ground clearance and much lesser line of sight on Indian roads might be a concern but as a friend of mine said - "You will become a versatile driver only if you have a car that cannot negotiate such roads easily". True enough. If I can drive this Sedan now, I can possible drive any car later. Same reason why I chose Manual over Automatic. Dying car segment, dying gearbox type and probably dying fuel type in near future - what a time to buy a car I plan to keep for 10 years

Personally no regrets though. Always liked the Skoda brand. Much safer car than most on the roads (even if without the bells and whistles like ESP, TCS). And rather a proper car than some crossover make-belief segment (No offense to any sub 4M SUV owners - I myself considered Nexon for long for it's practicality).

[aniyo]

Originally Posted by Mad Max

I also suspect the condition of our infrastructure to be driver in purchasing mentality.

Even in Bangalore, while there is actually no need for a higher ground clearance for most areas, the fear of losing our exhaust in that ONE road where we travel makes up our mind in favor of a SUV vs a sedan. I live in the Bellandur area and I can say that till date, I have not seen ONE pothole being laid properly in 12 years. It's either a pit or a hill. Never flush with the road. When the roads are uneven, people tend to get safer with a higher ground clearance.

.

Not sure which part of Bellandur you stay, I stay in Green Glen layout. For a long time (4 years) there was a particular turn right opposite MK Ahmed outlet which was so badly built, it casued a serious bump for anyone who would take that turn. All etios, dezire and my Brio scrapped if we did not take turn at right speed and correct angle. Same is the case when going from ICIC bank onto the service road pathetic approach.
Ever since I moved to Nexon, I have absolute peace of mind. My wife was against City as it will have the same scrapping issue and parking close to footpath causes the door to hit when opening.

Also right opposite the Bangalore Central Bellandur the roads were horrible for a long time. I had to come to a crawl to get past the stretch

I did not want the CSUV I needed it for my mental peace

[slamnos]

The natural progression of car purchase couple of decades ago :

-> First buy : Hatchback (A-Seg)
-> Replaced with : Compact sedan (B-Segment)
-> Replace or add : SUV (C/D Segment)
-> Eventually luxury (Mostly were sedans then)

Progression of car purchase today :

-> First buy : So called Micro SUV (Kwid, Spresso)
-> Replace with : Sub-Compact SUV (Brezza, Ecosport)
-> Replace or add Compact SUV (Creta, Seltos),
-> Replace with bigger SUVs (Fortuner, Endy)
-> Eventually Luxury (Again SUVs)

No getting over fact that everyone from adolescence to retirement need SUVs

Manufacturers have made an SUV out of every segment !

[vjbox]

Originally Posted by Mad Max

I hate to say this but half of this evolution is driven by our fear rather than style or utility needs. Not gonna judge if it's good or bad but the sublime ride of a sedan is something we enjoy on the open roads which IMO can't be matched by an equivalent priced SUV.

Yeah, well said. I too have always thought that the evolution of Wannabe SUVs (like I call them) has been largely due to unscientific and poorly laid roads rather than a lifestyle need like how it is in the Western Countries. If our roads are well laid and maintained, most of us don't need anything other than a Sedan. Its a shame that while technology has been progressing so fast with the Auto Industry, our road conditions have been detracting. At the end of the day, Manufacturers realise that they just need to jack up the ride for Indian conditions and It eventually becomes a trend with the herd mentality kicking in.