First time Indian buyers prefer premium hatchbacks and compact sedans

Saturday 18 May 2013, 10:24 AM by

For the last few years, it has been a well known fact that Indians have more disposable incomes than about ten years back. Looking at the sales of automobiles in the Indian market, this fact becomes even more clear. Since last year, sales of vehicles in the entry level A-segment, such as Hyundai Eon and B-Segment (Hyundai i10, WagonR, Chevrolet Beat) have declined, while those of premium hatchbacks and compact sedans are on the rise.

First time Indian buyers prefer premium hatchbacks and compact sedans | CarTrade.com
First time Indian buyers prefer premium hatchbacks and compact sedans

It appears that most auto makers will have to streamline their products to meet the changing customer preferences. The demand for premium hatchbacks (Maruti Swift, Maruti Ritz) and compact sedans (Honda Amaze, Chevrolet Sail) has been steadily increasing. Automobiles are becoming more of status symbols rather than just affordable means of transport. Commenting on the new trend, Director of Sales at General Motors India, Vikas Jain said, “The A and B1 segment sales are shrinking with more people migrating to bigger cars. The massive discounts in the small car segment should tell you the extent of suffering of manufacturers of these cars.” Discounts in A1 and B1 segments are being offered in the range between Rs. 20,000 to Rs. 1 lakh, as per make and model.

First time Indian buyers prefer premium hatchbacks and compact sedans.

According to most industry experts, the new trend is more evident in the case of first time buyers, who are approaching showrooms with a higher price in mind, as compared to a few years back. This trend is also being observed by executives at banks. Sumit Bali, Executive Vice President at Kotak Mahindra Bank, said, “The entry level A-segment has been soft all through last year and of late first time buyers are going straight to entry level sedans. So the A and B segments continue to be soft. The second half of this fiscal should be slightly better in terms of demand and sentiment.”

There are also other interesting events in the Indian economic scenario which have the potential to influence buyers' decisions. One of these developments is the drop in prices of petrol, which slowly seems to be inching closer to diesel. As per Maruti Suzuki Chief Operating Officer (COO), Marketing and Sales, Mayank Pareek, it may not be too long before petrol vehicles make a comeback. He mentioned that sales in the A2 segment are high due to Swift and Ritz diesel versions, but it may not be too long before these vehicles start feeling the pressure from entry level cars, that predominantly run on petrol.

As per Pareek, the upside of current market conditions is that rural areas are experiencing high growth. He commented, “We have clocked a 17 per cent upside on rural sales last month," he said, adding, “The market should pick up in the second half of this year helping us close with 5-7 per cent growth if we're lucky.”

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