Will cheap small cars be dead in the future

Usually these trends start in developed markets and trickle down to developing markets over the year. In India, we are also seeing the trend of SUVs being favoured by buyers, and carmakers reciprocating to it (Espresso is categorised as SUV on the MS website).

BHPian GrandTourer recently shared this with other enthusiasts.

This video by carwow brings up a very interesting point about manufacturers preferring SUVs over cheap small cars.

In certain developed countries, carmakers like Ford have already stopped selling hatchbacks and sedans, and are selling mostly SUVs, EVs and sports cars. In the UK, Suzuki does not even crack the top 10 manufacturers:

Usually these trends start in developed markets and trickle down to developing markets over the year. In India, we are also seeing the trend of SUVs being favoured by buyers, and carmakers reciprocating to it (Espresso is categorised as SUV on the MS website). Now, are buyers subconsciously pushed towards SUVs/compact SUVs as manufacturers offer better products in this category? There's not enough data. However, the question is - will carmakers eventually stop making cheap small cars in order to lift their bottom line?

In countries like India, the majority share is held by MS, which still makes cheap small cars, but with the mandate of EV by 2030, will MSIL also look to compact SUVs/SUVs in lieu of small cheap cars?

What is your take?

Here's what GTO had to say on the matter:

Voted for no. We have to realise that India is a poor country & half of our fellow citizens make ~1.5 lakhs a year. Forget cheap cars, even cheap 2-wheelers will always enjoy enormous demand in India. It's the ultimate dream.

That said, entry-level hatchbacks are definitely not a growth segment anymore. If you look at the sales charts, many first-time car owners are skipping the cheap A segment and jumping directly to the B1 & B2 models. Some are also going for C1 & C2 cars. Hatchbacks were once the dominant body style in India; they now form 1/3rd of it.

Cheap hatchbacks will always bring in the volumes, but no growth + wafer thin margins + image issues means no brand is interested in it, apart from Maruti / Hyundai / Tata.

Here's what BHPian VW2010 had to say on the matter:

Cheap is a relative term. Low cost is the right term per say. We are 1.4 billion people and growing. We will have enough appetite for cars across different cost segments. While the ones visiting this forum may not fall into that bucket but low cost cars will always find buyers. It is still 200% safer than a two wheeler with a 6 month old baby hanging dearly for life.

More than low cost the market is ripe for used car purchases where people buy higher segment cars at lower price.

My Nano was sold as a cheap car. It was never cheap.

Here's what BHPian TorqueMonster had to say on the matter:

Voted for no. There will never be death for cheap and small cars at least in India. Many buyers are first time buyers of vehicles. These people need a car, but not the flashiest or feature-rich. They need a reliable car with good fuel economy. People buying these cars are mostly first-time buyers of vehicles. Most of India cannot afford to go directly to the Sedan or Crossover segments on their first purchase, for these people their necessity is to get a car that can carry their family, before eventually upgrading when the finance allow.

A middle variant Alto costs 4.4 lakhs in my hometown. It is still a huge sum of money for an average family in India. Indian's see cars as a status symbol and usually do not buy cars used to, so this can be another reason why new cheap cars sell a lot more.

Hence, as far as there is a rise in living standards of people, with people moving from cycles and two-wheelers to owning their own cars, there will always be a demand for cheap hatchbacks.

The only drawback which we can see is that except for the very few people wanting a secondary car, this segment depends on the first-time buyers, and hence with the eventual rise in living standards, this segment may suffer losses, as people may move to the more expensive hatchback/crossover segments. But for India at least, cheap hatchbacks are not going anywhere.

Here's what BHPian PrideRed had to say on the matter:

With increase in dimensions of cars(Current C segment cars are longer/wider than yesteryear D segment cars), small car definition also has to be revised. Swift/i10/Tiago/Punch are the new small car and are selling well. Micro hatches like Alto/Kwid/Celerio will see reduction in sales, most of numbers coming from tier 2/tier 3 cities and rural parts of the country.

Check out BHPian comments for more insights and information.