Can Small Cars Take On SUVs? Maruti Is Confident With Upcoming New Swift

Maruti Suzuki, the undisputed king of India's car market, is placing a curious bet. While they're launching new SUVs to capture the booming segment, they're also prepping up for the revival of hatchbacks with the new-gen Swift. This strategic move sparks a question - are hatchbacks poised for a comeback in India?

For decades, hatchbacks ruled Indian roads. The iconic Maruti Alto and Hyundai Santro were once synonymous with car ownership. However, the past few years have seen a dramatic shift. The charm of rugged, high-riding SUVs has captivated buyers, causing the hatchback segment's share to plummet from 47% in FY18 to a mere 28% in FY24.

Maruti Suzuki, the poster boy for hatchbacks, hasn't been immune to this trend. Their market share has dipped from 51% to 42% in the same period. To counter this, they've aggressively entered the SUV arena with the Grand Vitara, Fronx, and Jimny. Interestingly, their SUV sales now contribute a significant 28.5% of their total passenger vehicle sales.

But Maruti's faith in hatchbacks remains. Their optimism hinges on two key factors - affordability and market potential. Regulatory changes have driven up small car prices, creating a gap between affordability and aspiration for many buyers. Maruti expects this gap to narrow by 2026-27, paving the way for a hatchback resurgence.

This hope aligns with the broader trend of the two-wheeler industry. After years of sluggish sales, two-wheelers are witnessing a revival. Historically, a two-wheeler rebound precedes a similar growth in the four-wheeler market, albeit with a time lag. Maruti believes this pattern will hold true for hatchbacks, suggesting a revival is simply a matter of time.

India's low car penetration of 32 cars per 1000 people compared to mature markets like Japan (600 cars per 1000) further strengthens Maruti's argument. As car ownership becomes more accessible, there will be a space for various segments, including hatchbacks.

The current market scenario also presents interesting pointers. While April 2024 saw a minor growth in domestic passenger vehicle sales, there are uncertainties. Higher stock levels compared to the semiconductor crisis-hit 2023 and upcoming elections create a wait-and-see atmosphere. This might lead to single-digit growth in FY25, potentially impacting both hatchbacks and SUVs.

So, will hatchbacks reclaim their lost glory? The answer is multifaceted. Affordability will undoubtedly play a crucial role. If the price gap narrows, budget-conscious buyers might return to hatchbacks. Additionally, manufacturers must adapt to changing preferences. Feature-rich, stylish hatchbacks that offer excellent fuel efficiency could woo a new generation of buyers seeking practicality without compromising on looks.

The rise of electric vehicles throws another variable into the mix. If EVs become more affordable and practical, they could disrupt the entire car market, including hatchbacks and SUVs.

In conclusion, the future of hatchbacks in India is intriguing. While SUVs hold the current spotlight, hatchbacks possess inherent advantages – affordability, maneuverability, and fuel efficiency. Maruti Suzuki's strategic move and the potential for an affordability correction suggest a comeback might be on the horizon. However, the industry's overall growth trajectory, the rise of electric vehicles, and manufacturers' ability to adapt to evolving buyer demands will be key factors in determining the fate of hatchbacks in India's automotive story.