Between FY2018-19 and FY2023-24, the decline in hatchback sales has been matched by strong growth in both entry-level and premium SUVs.India’s passenger vehicle market is undergoing a major transformation, with SUVs emerging as the dominant choice and entry-level hatchbacks steadily losing ground.
A recent SOIC Research report, Premiumisation: India’s Next Consumption Wave, shows that hatchbacks have been losing market share for five consecutive years, reflecting a shift in consumer aspirations. The report notes that SUVs now account for nearly half of all passenger vehicle sales in India, while hatchbacks have stagnated despite rising incomes.
Between FY2018-19 and FY2023-24, the decline in hatchback sales has been matched by strong growth in both entry-level and premium SUVs, highlighting a broader move towards premiumisation in the industry.
“Mahindra & Mahindra has decided not to make sedans, hatchbacks and smaller SUVs,” said Dr. Anish Shah, MD & CEO, Mahindra Group, underscoring the strategic pivot of manufacturers towards larger, more feature-rich vehicles.
Tata Motors MD Shailesh Chandra echoed this trend: “Especially in the SUV segment, we are seeing growth significantly higher than the industry average… driven by both upgraders and first-time buyers.”
The report’s Hatchbacks vs SUVs chart reveals a sharp divergence in performance. In 2024, SUV sales rose 23 per cent year-on-year, while hatchbacks fell by 17 per cent. Market share for SUVs has climbed to 52 per cent, compared with just 26 per cent for hatchbacks, marking the latter’s weakest showing in two decades.
Analysts attribute this shift to affordability pressures in the entry-level segment and changing consumer preferences that increasingly prioritise aesthetics, comfort, and brand perception over compact size. The premiumisation wave is evident across the auto ecosystem—from design and interiors to accessories and ancillaries.
“India is graduating from small cars to upper-segment cars,” said R.C. Bhargava, Chairman, Maruti Suzuki. He added that while small cars may experience occasional cyclical revivals, the long-term trend clearly favours SUVs.
As automakers reorient their portfolios toward larger, feature-rich models, the momentum behind SUVs is expected to continue, signalling a fundamental shift in India’s car-buying landscape.
