India's Auto Market Driven by SUVs Post GST Cut, Customers Prefer Bigger Cars, Says Hyundai Executive

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AuthorAditi Singh|Published at:
India's Auto Market Driven by SUVs Post GST Cut, Customers Prefer Bigger Cars, Says Hyundai Executive
Overview

Sales of Sports Utility Vehicles (SUVs) are now the main driver of India's passenger vehicle market, according to a top Hyundai Motor India executive. Following a Goods and Services Tax (GST) rate reduction, customers are choosing to upgrade to larger vehicles like SUVs instead of downsizing, as the same budget now allows for bigger car purchases. Hatchbacks and sedans, while still part of the mix, are no longer leading the segment's growth. Hyundai expects SUVs to contribute up to 80% of its sales by 2030 and is investing heavily in new models, including electric vehicles and luxury brands.

A senior executive from Hyundai Motor India has stated that Sports Utility Vehicles (SUVs) are currently the primary growth engine for India's passenger vehicle segment. This trend is observed even after a reduction in Goods and Services Tax (GST) rates, which has paradoxically encouraged consumers to upgrade to larger vehicles rather than opting for smaller ones.

Tarun Garg, Chief Operating Officer of Hyundai Motor India, highlighted that while hatchbacks and sedans were once the dominant forces, SUVs are now leading the market. Data indicates a declining share for hatchbacks in overall passenger vehicle sales, dropping from 22.4% in January-August to 20% in October. Conversely, the share of SUVs has been increasing significantly.

The GST rate cut has empowered customers with the same budget to purchase larger, more aspirational vehicles. This has shifted consumer preference away from small cars towards compact SUVs and larger models.

Hyundai Motor India sees SUVs as the "toast of the nation" and reports that SUVs currently constitute 71% of its total sales, with projections to reach 80% by 2030. The company has launched an updated version of its compact SUV, the Venue, and is investing Rs 1,500 crore in its development. Hyundai plans significant investments of Rs 45,000 crore by FY30, introducing 26 new models, including MPVs, off-road SUVs, and a dedicated electric SUV by 2027. The luxury brand Genesis will also be launched in India by 2027.

Hyundai is also focusing on electric vehicles (EVs) by enhancing public charging infrastructure and localizing the supply chain, including battery packs, to reduce overall EV costs.

Impact
This news indicates strong growth potential for companies with a robust SUV portfolio. It suggests a strategic shift required from manufacturers, potentially leading to increased sales and profits for those adapting quickly. The automotive sector in India is expected to see continued dynamism.
Rating: 8/10
Difficult Terms:
GST (Goods and Services Tax): A unified indirect tax system levied on the supply of goods and services in India.
Compact SUV: A smaller category of SUV, typically built on a car platform, offering higher ground clearance and a more rugged appearance than traditional cars.
Hatchback: A car body style with a rear door that swings upwards to provide access to the cargo area.
Sedan: A passenger car with a separate engine compartment, passenger compartment, and trunk.
PV (Passenger Vehicle): Any motor vehicle used for carrying passengers, typically with four wheels and seating for up to nine occupants.
ICE (Internal Combustion Engine): A heat engine where the combustion of a fuel occurs with an oxidizer in a combustion chamber that is an integral part of the working fluid flow circuit.
EV (Electric Vehicle): A vehicle that uses one or more electric motors for propulsion, powered by batteries or other onboard energy storage systems.
MPV (Multi-Purpose Vehicle): A vehicle designed to maximize interior space for passengers and cargo.

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