SIAM May figures point to growing demand for utility vehicles

Key highlights:

• UV sales posted a massive 18.8% growth in sales in May 2017
• Rising demand for SUVs to push car market
• Slowdown in passenger cars with 4.8% growth in May

Giving further weight-age to the trends of rising demand for SUVs, the Society of Indian Automobile Manufacturers (SIAM) data released on Friday showed that utility vehicles (UV) were the ones in the driving seat for growth in sales in May. UV sales posted a massive 18.8% growth in sales in May 2017 to push the total passenger vehicles sales.

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SUV sales grew to 69,845 units in May 2017 from 58,793 units in the same month last year. This helped push passenger vehicle growth to 8.63% as sales rose to 2,51,642 units in May this year from 2,31,640 units in the same month last year.

Passenger cars saw a slowdown in growth as it grew by 4.8% in May in comparison to the corresponding period last year. While van sales grew by 9.5% during the month.

Domestic passenger car sales increased to 1,66,630 units in May this year from 1,58,996 units in the same month last year. While van sales grew to 15,167 units during the month from 13,851 units in the corresponding month last year.

The May sales figure strongly points to a growing trend in the car market of rising demand for premium cars such as SUVs.

According to recent HSBC report overall market share of SUVs in India's passenger vehicle market has increased to about 27% currently from around 14% five years back.

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The mini segment, on the other hand, is only 28% market share, down from 45% in FY09.

The reason for this is that more first-time buyers choosing to go for second-hand compact hatchbacks and then upgrading to compact SUVs.

The attractions for premium cars are higher ground clearance, more room and the desire to upgrade to a smarter vehicle. The desire to meet customer expectations has led to a number of compact SUV, sub-compact SUV models being launched in recent years.

This can be seen as some of the UVs have posted high growth in sales during May and the last few months. This includes Maruti Suzuki Vitara Brezza that posted a 72% growth during the month to sell 12,375 units.

Hyundai Creta too posted a 18.7% growth in sales as it sold 8,377 units during the month. Mahindra & Mahindra's Balero posted a large 54.6% growth in sales during May and Maruti Suzuki Ertiga grew by 72.3% during the same month.