The trend set in the first four months of FY26 within the automotive industry is undeniable. The recovery in sales across most segments and models is real, even if skewed toward a clear rising winner: the SUVs.
Even though demand for passenger cars has also improved, SUVs and LCVs are clearly outpacing them with sales rising by 67 percent.
The combined share for these has grown to 28 percent of total industry volumes, the highest in over a decade. This shift is becoming difficult to ignore. It is perhaps for this reason that suddenly there is a visible proliferation of newSUVs introduced to the market as every one wants to get a piece of the pie. The question is, how big is this pie?
Recovering consumer demand bolstered by reduced financing rates have certainly led to a growth in sales of locally assembled vehicles, but the market itself has only expanded compared to one or two years prior.
In fact, compared to the peak, volumes are still at least 43 percent behind for passenger vehicles. On the flip side, SUVs and LCVs are at their peak volumes. Add Lucky Motors and Changan’s offerings into the mix, and the growth in the segment would be unprecedented.
Within the passenger cars segment, Suzuki Alto is losing steam. Despite growing volumes from last year, Alto sales are 22 percent lower than FY22. Cultus is the same.
The combined sales of Toyota Corolla and Yaris are recovering well with a 71 percent year on year surge, though the two do not come close to the heights once achieved during Corolla’s dominance.
Honda’s City and Civic volumes have improved 37 percent but remain 64 percent below their 10-year peak. If there is an upward push toward SUVs, there is a downward pressure on sedans. The net result is a hallowing out of the entry and mid-segments.
On the other hand, the SUV surge comes on the back of Haval’s meteoric rise, 37 percent higher than last year. Fortuner and Hyundai’s Tucson continue to remain strong, propelled by wealthier buyers.
LCVs have expanded sharply with 73 percent growth led by Ravi, Porter and JAC reflecting not only commercial demand but a shift among households and small businesses toward utility vehicles. For the first time in a decade, combined SUV and LCV sales are at their highest level even though total industry volumes remain below historic peaks.
In answer to the initial question then, the pie is smaller, but perhaps richer?
The message is getting louder with time. The accessible segment is leaving way for a wave of premium and high margin cars.
Assemblers and OEMs are prioritizing models with higher profitability and consumers who can afford to spend more are increasingly opting for larger vehicles. If some of them happen to be hybrid or EV models, that works too, not because its green, but because its fashionable.
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