Small cars in India losing sheen, SUVs becoming a rage

The market share of small cars in the Indian passenger car market dipped to as low as below 50%, for the first time in the year 2011. The small car domain which has enjoyed the attention of a lot of major car manufacturers like Tata, Renault, Bajaj, Nissan and many others has failed to live up to the expectations. This has created doubts amongst manufacturers that whether spending so much money amounting close to millions on this segment of small cars is fruitful or not.

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As a result of a dip of around 0.07 percent in the sales of the small cars like Tata Nano, Maruti Alto, Maruti WagonR, Hyundai i10, Hyundai Santro and Eon etc in the Indian market the share of this segment of cars in the market came down to an all time low of 47 percent. However the position of cars in premium compact segment like Maruti's Swift, Hyundai's i20 and Volkswagen Polo was reasonably good.

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There growth rate was somewhere around 6.5 percent last year and they maintained their 11 percent market share in the country. Surprisingly, the biggest change was in the sale of SUVs. These new cars which have a price almost triple of that of the small cars have had the fastest growth in the market. Due to massive demand their growth was almost around 32 percent last year. As analysed by the SIAM, the Indian customers have perhaps 'matured' and are thus attracted by the new cars like SUVs and other premium models.

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Another noticable result was that even though the interst rates and cost of petrol increased in 2011, it colud not affect the popularity of new sedan cars like Hyundai Verna, Mahindra Verito and Chevrolet Cruze. However these factors coupled with the lack of diesel cars caused the downfall of the small car segment as thier buyers belong to the class of economy preferring customers. This also justifies the popularity of premium cars as most of them come powered with diesel engines.

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Still the experts are optimistic about the comeback of the small cars after the stability of petrol prices and rate of interest. Popularity of the SUVs can be attributed to larger seating capacity, diesel supported engines and also improved road facilities. Major companies have lined up their SUVs for launch very soon. Toyota Fortuner and Mahindra XUV 500 are some of them. The SUVs have a very bright future in the Indian market according to experts.