It appears that the automobile industry and the accompanying government policies are serving a small segment of the automotive market, a segment that is seizing more and more of the pie.
Even as Suzuki celebrates its extraordinary sales for Alto—the quintessential middle-class car, the lighter Mehran-alternative—July’s numbers confirm aconcerning pattern that has been taking shape. SUVs are taking over.
In July-25, SUV and LCVs, driven by Toyota’s Fortuner, Sazgar’s Haval and Hyundai’s Tucson contributed 35 percent to the total sales including passenger cars. This share grew 87 percent compared to the previous month in June and 46 percent from the average share for the last six months of FY25.
Compare this to passenger cars that fell 60 percent compared to June; down 32 percent compared to the average passenger car sales in the last six months of FY25. This means that even when consumers were discouraged to make fresh purchase for passenger cars, SUV buyers remained undeterred.
Over the past year, both SUVs and small engines like Alto have visibly shaken the market. Alto’s share in passenger cars stands at an average of 41 percent; 31 percent of the total volumes including LCVs and SUVs.
Market insights also suggest Kia Picanto is making a comeback, after initial hiccups, even though it is priced nearly Rs10 lakhs above Alto. There is a clear demand for smaller cars, even when assemblers are unprepared to offer more options.
In July- 25 however, Alto sales have dropped by 75 percent compared to June and by 47 percent compared to the last six-month average sales in FY25.
The tax increases and new levies introduced in the budget appear to have deterred passenger car buyers, especially Alto buyers. This obviously lays in sharp contrast to SUV sales that have grown unencumbered by tax increases. The fact is, higher-end cars rarely see a reduction in demand when prices increase. Incremental hikes do not pose as threats.
Suzuki perhaps was smart. In June, in order to shield buyers from the forthcoming tax hike, it pushed for early invoicing for July and August sales which caused June’s sales to skyrocket to nearly 9500 units.
Such strategies can only work to a certain extent. At some point, Suzuki will have to bring its Alto customers to the new price point. This Suzuki must do for its survival because most of the company’s other options such as Wagon-R and Cultus are nearing redundancy.
Alto has three models and various upgrades to choose from which is serving a wide array of customers looking for compact vehicles. There isn’t enough market for other Suzuki options. Meanwhile, it is not taking new bookings for Swift as the company continues to struggle with procurement challenges.
As cost of financing came down, automobile market has found fresh demand across models.
However, regulatory constraints imposed on car financing, costlier cars due to tax hikes and overall spending power will dictate which models rise to the top and which models sink. A fair prediction would be a substantive increase in the share of SUVs and LCVs as consumers on the lower-end of the market struggle with pricing and regulatory limitations.
Yet, the growing tilt toward SUVs and LCVs comes with broader trade-offs—higher fuel consumption, added strain on already congested urban infrastructure, and a heavier environmental footprint that could outweigh any short-term gains reserved for automakers. But policymakers are not ready to talk about that, beyond levying new indiscriminate taxes.
Copyright Business Recorder, 2025
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