Companies

SUV boom to continue on strong order books

G Balachandar Chennai | Updated on July 17, 2021

Increasing need for personal mobility and shift in buyers’ preference will keep the sales momentum intact   -  PAUL NORONHA

Manufacturers, experts bullish on the segment despite threat of a third Covid wave

If there’s a SUV product in a passenger vehicle (PV) company’s portfolio, then the probability of it getting included in the customers ‘decision bucket’ is high. The SUV segment is turning out to be a lifeline for PV makers with a positive growth outlook this fiscal as the economy and industries limp back to normalcy amid the pandemic.

The SUV segment will continue to buck the market trend on the back of robust demand. The segment has been clocking monthly volumes of more than a lakh units for the past several months (except lockdown-hit May 2021) and the trend is expected to stay or even get better.

Multiple factors aid the growth of SUVs — increasing need for personal mobility, shift in buyers’ preference from sedans to SUVs and strong order book of vehicle makers will keep the SUV sales momentum intact for several months.

Market analysts indicate that the current SUV order book could last up to festival season and beyond. But, continuing challenges in sourcing semi-conductor parts may delay the delivery of vehicles. If there are no major lockdowns, the order book is likely to be strong.

Pending orders

Companies such as Maruti, Hyundai, Kia, Mahindra, Tata, Toyota, Renault and Nissan have strong pending orders for their SUVs, particularly for their recently launched products.

Market leader Maruti Suzuki has more than 70,000 pending customer orders for its UVs (including SUVs and MPVs).

“The UV segment is indeed witnessing a lot of customer interest over the last few years. Many OEMs have introduced many new offerings in this segment keeping it vibrant and engaging. We are confident that this segment will continue to garner customer interest,” Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki India Ltd, told BusinessLine.

Maruti sold nearly 230,000 UVs (SUVs & MPVs) in FY21, while its total UV volumes stood at more than 60,000 units during April-June 2021 period. Vitara Brezza, despite being available only in petrol, holds one-fifth of market share in the entry SUV segment. Ertiga and XL6 together hold 70 per cent of the MPV segment.

“Since the emergence of the SUV segment, its growth trajectory has become more or less immune to external factors which normally affect any other car segment or for that matter any other consumer product. We don’t expect this segment to slow down anytime soon. SUV-body type has become the most popular type in any price segment, be it the sub-4 metre or the mid or large car segments,” said Suraj Ghosh, Associate Director, Powertrain & Compliance Forecasts, South Asia, IHS Markit.

UV sales

During Q1 of this fiscal, total UV sales (including SUVs, MPVs and MUVs) stood at 286,092 units compared with 224,224 units in June 2019 period (June 2020 quarter was hit by the first wave). Share of SUVs in total PV sales (excluding vans) increased to 46 per cent now, from 33 per cent in Q1 of FY20.

“While there have been good enquiries and healthy pending customer orders after the lifting of lockdown, it is difficult to predict the surge and its likely impact this fiscal. We believe that the pace of vaccination has been picking up and will play a major role in spurring consumer sentiments. We anticipate SUV sales to be better in the coming months, provided that the pandemic does not pose newer challenges,” said a spokesperson for Toyota Kirloskar Motor.

Published on July 16, 2021

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