MUVs overtake sedans to rule the Indian roads ? INDOLINK ...

Source: The Economic Times, Jul 16, 2012

MUMBAI: The frenzy for multi-utility vehicles (MUVs) in the country has reached a new high. For the first time ever, the June ended quarter of the current fiscal has witnessed utility vehicles selling outsells sedans in their respective price brackets.

The shift towards multi-utility vehicles has been spurred by the latent demand for Mahindra & Mahindra?s premium sports utility vehicle XUV 5OO and multipurpose vehicles such as Maruti Suzuki?s Ertiga and the tried and trusted Toyota Innova.

What?s more, M&M?s XUV 5OO sales were almost 50% more than all competing cars put together in executive segment ( 11-15 lakh) for the first quarter of FY13. M&M sold approximately 9,000 units of XUV, whereas cars such as Corolla Altis, Chevrolet Cruze, Honda Civic, Skoda Laura and Volkswagen Jetta all put together sold 6,432 units.

Toyota Kirloskar sold about 20,000 Innovas, whose mid trim and high-end variant also compete with these models.

Pawan Goenka, president, automotive, Mahindra & Mahindra, said SUVs and MPVs outperformed other segments due to the value package which are on offer. The key factors like space, seating capacity, versatility, car-like comfort and attractive price points have triggered the demand.

?The XUV5OO has not only outsold any D segment car, but has sold more than all the 6 D segment cars combined in the first quarter. Continuous demand can be attributed to our clutter breaking styling, power-packed features, various technologies and a competitive price has fuelled its demand,? said Goenka.

If XUV has created a major dent in the executive segment, Maruti Suzuki?s Ertiga, which is averaging 6,000 units a month, is outselling mid-size sedans like Verna, Vento, City, except its very own entry-level sedan Dzire.

The polarisation gets even starker in the premium SUVs and the car segment (Rs 20-25 lakh bracket). If Honda Accord, Toyota Camry, Skoda Superb, among other, sold 1,244 units for the entire quarter of April to June 2012, SUVs like Toyota Fortuner, Ford Endevour, Skoda Yeti, among others, sold four times the cars in the segment at 5,580 units for the same period.

The share of MUV (SUV + MPV) in the overall passenger vehicle market has shot up 18% year-on-year in April-June quarter of this fiscal, versus 13% for the same period in FY12. About 1,18,000 units of MUVs were sold in an overall passenger vehicles market of close to 6.5 lakh units in the first quarter.

?With the Indian market maturing, there will be new segment and sub-segments that will emerge. You will see niche segments turning into volumes market. As for the MPV, SUV space, the market was always there, but there were not many options available. With our Ertiga and other offerings from the competition, the segment will expand further,? said Shashank Srivastava, executive director, marketing, Maruti Suzuki. The numbers clearly indicate that SUVs and MPVs are hot today and they are eating into the sedan segments and they are only going to grow.

As on date, M&M has secured bookings of close to 18,000 units of XUV, Maruti Suzuki has close to 47,000 bookings of Ertiga and Toyota intends to sell almost 75,000 units of Innova for the entire fiscal. With the likes of Renault Duster, M&M?s mini Xylo, Ssangyong Rexton and Ford Ecosport on the anvil, MUV sales may well overtake sedan sales in the country in the coming quarters, said experts.

So what is driving the SUV craze?
While there is a novelty factor in these SUVs, the value package in these products is what is driving the buyers, who experts feel were waiting for long while to get hold of products like XUV or Ertiga.

Rahul Jain, partner and director with Boston Consulting Group, said the utility vehicles were always close to the heart of the Indians. It is the dearth of offerings between the rugged SUVs and the premium end, that the market could not take off, but scenario is fast changing.

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