The new emission norms (called real driving emissions, or RDE) from this month have led to the discontinuation of certain small cars like the Maruti Suzuki Alto 800 and the Renault Kwid (800 cc), but the overall hatchback segment has grown from around 11.52 lakh units in FY22 to 13.40 lakh units in FY23.

However, because of the rising costs, the affordability factor is coming down for this segment, which is price-sensitive, Shashank Srivastava, Senior Executive Officer, Sales and Marketing, Maruti Suzuki India (MSIL), said.

Subdued growth

“There is an uptick in both entry-level (like Maruti Alto, S-Presso, and Renault Kwid) as well as mid-hatchback and premium hatchback segments. But, if you compare with what was five years earlier, the peak was 15.60 lakh units in if you compare with the previous fiscal and this year, it has grown, but it is still very low as compared to peak time,” Srivastava told businessline.

The affordability factor for the hatchbacks has been adverse because the growth in income at this level is not as high as it should be, and that is why the affordability factor has come down for this segment, he said.

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“The consumers in this segment are price sensitive, which we believe is the reason why we have seen this decline from 45 to 46 per cent during its peak time (2017-18) to the current 35 per cent,” he said.

However, while the overall percentage for hatchbacks has come down from 38 to 35 per cent, in terms of absolute volume, there has been about a 17 per cent increase in the overall growth for the hatch segment, from around 11.52 lakh units last year (FY2021-22) to 13.40 lakh units in FY2022-23.

‘Demand to continue’

When asked if the hatchback market would continue its growth momentum, he said since the Indian demography, which has 65 per cent of the population in the age of 35, and the number of first-time buyers continuing to be high (47–48 per cent), the demand would continue.

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Similarly, for the mini segment (entry-level hatchback), the market is expected to grow because, out of the total hatchback market (13.40 lakh units), the mini segment contributed around 2.53 lakh units in the last fiscal as compared with 2.40 lakh units in 2021–22.

It is a small growth, but still has some significance in the overall market, Srivastava added.

The overall passenger vehicle market registered a growth of 27 per cent with 38.8 lakh units in FY2022-23, which is the highest ever annual sales in more than a decade, and it is expected to grow by 5-7 per cent to 40.5–41 lakh units in the current financial year.