Despite Jairam's rap, SUVs become big hits in India

Sports utility vehicles (SUVs), rapped by Union Environment Minister Jairam Ramesh for being fuel guzzlers, are increasingly becoming a rage amongst buyers.

Toyota Kirloskar's Fortuner and BMW's X1 have received unprecedented response from the market despite their steep price tags, say both companies.

Both models operate under the entry premium tag in the SUV segment.

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While Toyota has been repeatedly forced to shut bookings for its SUV, demand for the BMW X1 is a step better, with customer queuing to buy the vehicle although the German company is yet to formally open bookings for it.

The SUV, whose deliveries will commence in January, will be the cheapest model from BMW to be sold in India.

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According to sources, BMW will price the vehicle at Rs 22-23 lakh (Rs 2.2-2.3 million), much below their entry-level sedan 320i (3-Series) priced at Rs 26.95 lakh (Rs 2.69 million).

Rising demand for the X1 will give BMW's overall sales in India a major fillip, enough for the company to maintain its lead over rivals Mercedes-Benz as India's biggest luxury car maker.

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"Although bookings for the X1 hasn't opened yet, consumers are making payments for it in advance.

There is a huge interest for the vehicle which is a result of a teaser campaign we had started six months back," stated a spokesperson at BMW India.

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According to BMW dealers, since booking for the X1 hasn't been opened yet, customers are instead booking the 3-Series and are asking for this to be replaced with the X1 when BMW starts accepting bookings for the latter.

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Rough estimates suggest the 'order bank' (a term used to describe the actual demand even before bookings open) for the X1 will touch 1,000 units, as the two dealerships from Mumbai alone have clocked about 300 units.

"If you are booking the X1 now, you will only get the vehicle in May," said a BMW dealer.

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Likewise, Toyota, to reopen nationwide bookings for the Fortuner on January 1, is running an order backlog of 5,000 units for the model.

Consumers of this SUV, priced at Rs 19.5 lakh (ex-showroom, Mumbai), are being asked to wait  six months to take delivery.

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"We are not planning to hike the Fortuner's production, as there is no room for expansion (at the Bangalore factory).

We are focusing on the Innova, whose production is much higher," stated Sandeep Singh, deputy managing director, sales and marketing, Toyota Kirloskar Motors.

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Toyota is producing 4,200-4,700 units of the Innova per month, while Fortuner is witnessing an output of 950-1,000 units per month, according to Singh.

Toyota had to shut bookings of the Fortuner twice since the launch, due to inability to match demand.

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Toyota says it does not expect any significant impact on demand for the Fortuner following the launch of the BMW X1.

"They are two very different vehicles, with distinct characteristics. However, generally when  there is a huge waiting period for a model, then people certainly will try to explore other options," said Singh.