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Full Throttle

Price route


From luxury variants that cost as much as a tony apartment to compact ones that are cheaper than many small sedans, Indian buyers have a surprisingly vast range of SUVs to choose from

Eberhard Kern, Mercedes-Benz's India boss, can't stop gushing about the intrinsic merits of his newest baby, the G 63. Yet at first glance, a great many Indians might disagree. Like wary guests at a birthday party hosted by a touchy parent they're likely to trade snarky comments on the sly to each other. In this case they just might pronounce this ultra-exclusive SUV "dull" and "old-fashioned", while loudly baulking at its Rs 1. 5 crore price tag. 

A considerable number would disagree, though. The German auto major has sold 30 of these iconic vehicles (its predecessor, the G 55 AMG, actually) in India since its launch in 2011. Groups of potential customers have even been taken to the plant that manufactures the vehicles in Graz, Austria, and as Kern points outs, "They already knew of the uniqueness of the G class - about its being the ultimate off-roader SUV and a unique, iconic statement on account of its design being largely unchanged since 1979. They also knew all about some of its famous global users, like Arnold Schwarzenegger and Britney Spears. " 

Kern's delight at India's "latent demand for SUVs", and his company's elaborate sales efforts for its top model, speaks volumes of India's newfound love for SUVs and MUVs. Auto companies are only too happy to reciprocate by unveiling a new model or two almost every other fortnight. 

Sorted by cost the G63 - a sturdy Teutonic beast that delivers a jaw-dropping 544 bhp - now sits atop a surprisingly long list of such vehicles available in India. Buyers can choose from over 60 models of SUVs and MUVs, the cheapest of which costs just Rs 6 lakh, with a whole lot available at numerous price points in between (see table below). That fact alone would have made some jaws drop in automotive circles in Europe or the US even a decade ago. 

"The SUV/MUV segment has been India's fastest growing for a while now. And it grew by a stunning 59 per cent in the last 10 months of this financial year, " says Pravin Shah, CEO of Mahindra & Mahindra's (M&M) automotive division, a company that appears to have ridden the crest of this boom in more ways than one. With a product lineup powered by a clutch of such vehicles - "positioned at affordable and carefully chosen price points, after we spotted the gaps and recognised unmet needs, " according to Shah - M&M registered 30 per cent growth this fiscal. 

Pricing and options have indeed been big factors - for M&M and others scrambling to grab a chunk of this pie. Pradeep Saxena, executive director of TNS, a top market research firm, explains how the biggest factor probably pushing SUV sales is the fact that so many are now available in the price range of mid-size cars. 

"If you examine some history, it's also been all about making the right offer at the right price to the right customers - most of whom in this case are repeat buyers of cars, who account for over 50 per cent of the car market anyway. There was a huge gap lying unaddressed, between Rs 8-10 lakh and Rs 25 lakh. Many have positioned vehicles here now. This is one big reason for a significant part of the sedan market shifting to SUVs. Moreover, such choice in SUVs/MUVs has also led to new segments opening up, " he says. 

Luxury car manufacturers have cottoned on to this too. According to Michael Perschke, head, Audi India: "A trend that is fast catching up is the growing demand for luxury SUVs in Tier-II and Tier-III cities in India. These cities display a healthy appetite for luxury cars and offer great opportunities for expansion. We've opened new showrooms in Kanpur, Raipur and Lucknow in the last few months, and will add several more. " While analysts and auto executives also list a whole host of other factors - growing individualism, the desire for greater safety and better performance - for this spurt in SUV purchases, they all circle back to the difference in fuel prices as a huge determinant, since most vehicles in this segment are powered by diesel engines. But with further decontrol of diesel imminent this also leads some to sound a note of caution. "With changes coming up in government policy a moderation will certainly be seen in SUV sales. In fact there's been a slight decline in sales last month, " points out Vishnu Mathur, director general, SIAM (Society of Indian Automobile Manufacturers), while also highlighting the fact that fuel efficiency is a big factor for Indian buyers, regardless of income levels. "Besides, " he points out, "these growth numbers, though impressive, have come on a small base. We must see how it stabilises over time, especially for the compressed and compact SUV segments, which are the ones powering growth. " 

Shah, like most of his auto industry peers, agrees - even as he gently rails against the proposed 'diesel tax' - that there's a small base. "But we've just started out in India. Even if one doesn't look at the US, where half the market is SUVs, look at South East Asia. Most big economies there have 40-45 per cent of the market as SUVs. We're at just 15 per cent here, and should aim to push that to 20 per cent - mostly by offering a variety of options to customers, to better address their desires. " Sales are bound to keep rising from here on, adds a confident Shah.

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