COMPACTS ARE REVVING THE INDIAN CAR MARKET

In a country where cars are seen as an extension of one's social status, shrinking parking spaces and congested roads are compelling Indian buyers to shift focus to the smaller compact segment that still offers luxury and maximum bang for the buck, experts maintain.

Car manufacturers also are flooding the market with their mini sedans, priced between Rs.500,000 and Rs.900,000, and sports utility vehicles (SUV) and multi-utility vehicles (MUV) in the range of Rs.600,000 to Rs.1.2 million.

The previous United Progressive Alliance (UPA) government's policy of lower excise of eight percent for cars under four-metre length as compared to sedans with 20 percent and SUVs with 24 percent gave birth to this segment. The curent National Democratic Alliance (NDA) government's decision to continue with this policy has given a further boost to the segment.

This segment is seeing a decent sales drive as it also offers the right combination of space, looks, affordability, luxury and, most importantly, better fuel economy and easy manoeuvrability in the city traffic, compared to full size sedans. 

Then, these vehicles are also quite comfortable to drive for the weekend getaways, which is becoming quite a popular recreation among youth today.

As a result, the segment has been growing at a healthy rate of 15-16 percent, compared to the rest of the industry - which has even seen marginal de-growth.

Features like touchscreen multi-information display, Bluetooth connectivity, projector headlamps, parking sensors, day-time lamps and CD players that were restricted to one segment above till a few years ago, have now made their way to compact cars as well, as auto makers lure the young tech-savvy buyers.

Even the buyers have become more realistic in choosing the right type of vehicle

Cars like the Ford EcoSport, Honda Amaze, Maruti Suzuki Swift Dzire and Hyundai Xcent are the popular sub-4-metre offerings. Along with other compact models like the Renault Duster, Nissan Terrano, Maruti Suzuki Ertiga and Honda Mobilio, they have not only taken the market by storm but also helped some car makers, who were fringe players at best, to change their fortunes.

Companies like Renault and Ford have literally piggybacked on the segment to become prominent players overnight.

While Renault, despite a late entrant in the Indian market, became a household name once it launched the Duster SUV in July 2012, Ford that had tasted limited success in its close to two-decade operations in India saw unprecedented interest among buyers when it launched the Ecosport.

The hugely popular mini SUV got 40,000 bookings in a record 17 days and still has a waiting period of four to eight months in various parts of the country.

Little wonder this segment is the one where car-makers in India seem to be focussing on. In the next six months, at least half a dozen more mini-sedans and SUVs are expected to hit the market from makers like Maruti, Tata, Hyundai, Mahindra, Fiat, Chevrolet and Volkswagen.