Hatchbacks will continue to exist despite ‘suvisation’ of the car industry: FADA President

In the midst of the current debate about whether entry-level small cars will organize a comeback in the GST 2.0-era, Hatchbacks will retain their market relevant despite the worldwide trend of “suvisation” in the automotive industry, according to the Automotive Dealers’ Body Federation of Automobile Dealers.

While the largest car manufacturer in the Land Maruti Suzuki India, who has a dominant position in the small car segment, expects about 10 percent growth in the segment after the GST -speed reduction, its rival Hyundai Motor India is of the opinion that micro -suvs such as consumers and punch will grow compared to Hatchbacks.

“This ‘suvisation’ of industry is happening all over the world. It is not because India has bad roads … This whole thing about SUVs will not disappear. It will still be long,” said Federation of Automobile dealers Associations (FADA) President CS Vigneshwar to PTI.

However, he said that although SUV’s give a goal of comfort, style and safety, “Shutters will have their own space because some people still want the shutters”.

Vigneshwar responded to a search about how the dealer brotherhood sees the future of small cars at entry level, which have become affordable after the GST rate reduction, after witnessing declining sale in recent years.

Apart from the survival of buyers for small cars, he said, is the other main reason that many manufacturers continue to offer multiple products in the segment, so that the market remains alive due to competition, unlike in the medium-sized sedan segment, which has sometimes been pressed. “SUVs in every category and subs, exist.” Said Vigneshwar, adding that it is the sedan market that is pressed. Accurate to industrial estimates, from FY19 to FY25, wholesale of entry level Small cars have fallen by more than 60 percent to 1.44 Lakh units of 3.7 LAKH units. On the other hand, the total wholesalers of the passenger vehicle grew during the period by 28.5 percent to 43.38 Lakh units of 33.77 Lakh units.

Earlier, Maruti Suzuki India Senior Executive Officer, Marketing & Sales, had stated Partho Banerjee that although the revenue growth of the domestic passenger vehicles is likely to be about 7 percent compared to the next tax, for the small car -segment, the expectation is about 10 percent growth.

A combination of factors, including income tax relief on the annual income to RS 12 Lakh, transfer of the impact of repo interest rate cuts by the RBI, resulting in lesser EMIs and the GST rate reduction, will help to make small cars affordable, so that two-wheeler riders were not encouraged to upgrade.

On the other hand, Hyundai Motor India LTD brought director and chief operating officer Tarun Garg all time that the GST interest rate cuts of “28 plus 1 percent” and “28 plus 3 percent” to 18 percent are not only limited to hatchbacks and extend to other categories that benefit.

“(The Micro SUVs) Exter and Punch never existed four years ago. The maximum sale is still in the RS 6-10 Lakh segment that Hatches are used to sell there earlier. Today SUVs have been sold (due to changing ambitions of customers) … It is not as suddenly because the GST has risen …” He will die … “He will die …” He will die … “

For SUVs of less than RS 10 Lakh, the benefit of the customer is the most after the GST rate reduction, he claimed.