SUV dealerships sell better versus bearish car market

The automotive sector globally is going through difficult times and even the main seeded players in this sector have to suffer large losses or face a sharp drop in sales. Tata Motors, the largest producer of commercial vehicles in India, must keep its unit closed for more than 20 days in the last 2 months. Maruti Udyog, the biggest player in the passenger car segment, must follow the same strategy.

The picture across the border from India is even bleaker. Across the industry, automakers sold 896,124 new cars, minivans and trucks in December, a 36 percent drop compared to December 2007, according to preliminary data released yesterday by industry research firm Autodata.

But in this bear market situation, there is something interesting to learn from Indian marketers. While truck, car, SUV and commercial vehicle sales are at historically low numbers, SUVs in India still rule the roads.

Last month, when Ford USA saw a record 60% less than it usually does, Toyota’s SUV sales were down 38%. But OEMs in India have a different game to boost their sales. Rather than push their smaller car segment, Indian players put their weight on driving sales of premium SUVs with a price range above 13 lakhs. SUV manufacturers introduced newer models, each better than the last, marketed to the right audience, and managed to bring home an envious sales figure.

What made SUV sales in India possible? Dilip Chenoy, CEO of the Society of Indian Automobile Manufacturers (SIAM), an agency that tracks car sales, feels that SUVs sold here are very different from those rejected abroad. He says SUVs in India are not gas guzzlers. Here SUVs are built to be very small, low-capacity, inexpensive vehicles, primarily crossovers. Manufacturers even take the fuel efficiency factor into account when making the sales pitch.

The recent trend in SUV sales is actually promoting dealerships to get SUV dealerships from leading players like Tata, Mahindra & Mahidra, Honda, etc. The growing number of dealerships is also driving SUV sales as these dealers are a good promotional channel for sport utility vehicles in India. The harsh driving conditions and large space make these SUVs popular as large family utility vehicles in India.

Seeing the positive growth in demand for SUVs in India, even at this time when the global market is showing a huge drop in sales figure, Indian OEMs are launching new SUV models in India. Some of the next most anticipated models in the Indian market are Mahindra Xylo, Toyata Fortuner, New Nissan X-Trail and Tata Indicruz.

It would be interesting to watch the competition between these new models. The market is really tough. Although in the last month the SUV sales figure in India has skyrocketed compared to the past. But it is still a big challenge for manufacturers to keep the sales chart. One of the world’s largest auto markets, India, may see more SUVs rolling on the roads than ever before, in the coming months.