SUV market share has reached 52 per cent, while hatchbacks have declined to just 26 per cent, their weakest share in almost 20 years.
The Indian passenger vehicle landscape is undergoing a structural shift, and this time, it is not a short-term change in priority. This is a mindset change. A new SOIC Research report titled “Premiumization: India's Next Consumption Wave” points to a clear trend, SUVs are no longer just a segment, they are the new definition of mobility aspiration in India. The entry-level hatchback, which was once the default choice of first-time buyers, has been losing its position for five consecutive years, indicating that affordability is no longer the only deciding factor in the purchase decision.
The numbers tell the story clearly. SUV market share has reached 52 per cent, while hatchbacks have declined to just 26 per cent, their weakest share in almost 20 years. In FY2024 alone, SUV sales grew by 23 percent year-on-year, while hatchbacks declined by 17 percent. It's a surprising change for a market once dominated by compact cars.
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Premiumization isn't just about price, it's about identity
Be it the design and cabin refinement or the technology offering and road presence, Indian buyers are clearly looking for much more than functional mobility. The report said premiumization is flowing across the value chain, from OEM product strategy to components, internal suppliers and supporting ecosystems. Cars are no longer bought just for commuting; They are an extension of lifestyle, status and personal expression.
Automakers align portfolios
Car manufacturers are reading the matter and reacting decisively. Mahindra & Mahindra, which has seen tremendous success with the Scorpio-N, Thar and XUV portfolio, has made its stand clear. Mahindra Group MD and CEO Dr Anish Shah, quoted in the report, said, “Mahindra & Mahindra has decided not to make sedans, hatchbacks and small SUVs.”
Tata Motors is echoing this sentiment, with new-age SUVs like the Nexon, Punch and Harrier leading its volume play. “Especially in the SUV segment, we are seeing significantly higher growth than the industry average, driven by both upgraders and first-time buyers,” said Shailesh Chandra, MD, Tata Motors Passenger Vehicles.
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Even Maruti Suzuki, the face of India's hatchback era, has accepted this change. “India is moving from small cars to high-end cars and while small cars may come back cyclically, the structural growth will remain with SUVs,” the report quoted Maruti Suzuki Chairman RC Bhargava as saying.
aspirations have changed
Earlier, first-time buyers would visit dealerships in search of the most affordable four-wheeler. Today, first-time buyers increasingly want a vehicle with height, stance and features, whether that means stretching the budget or opting for long-term financing.
The SOIC report attributes this to rising disposable income, easier credit access and a change in mindset where ownership is about pride rather than just practicality.
what comes next?
With SUVs expected to retain their majority share till FY2025 and beyond, OEMs are reorganizing their product pipelines. Compact SUVs are replacing the traditional entry hatchback, and features once seen in premium models, touchscreens, connected tech, panoramic sunroofs are now standard conversation starters. 8 to 12 lakh bracket.
India's auto market is clearly at a turning point. The era of compact affordability is giving way to the era of attainable aspiration, and in that story, the SUV has emerged as the new cultural icon of Indian mobility.
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First publication date: 20 October 2025, 13:44 PM IST