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The law of diminishing utility vehicles

V Phani Kumar

The domestic utility vehicles market is witnessing an unusual trend with the share of smaller and luxury vehicles growing at the cost of vehicles with greater capacities.

The change appears to have been caused by the launch of a slew of upgraded products by the three leading players: Mahindra & Mahindra, Toyota and Tata Engineering.

This was particularly accentuated in October, when the sales of utility vehicles with seat capacities for up to nine passengers (including the driver) grew almost 72 per cent at 5,867 units, from 3,413 units.

This segment comprises mostly vehicles meant for urban areas, including Mahindra and Mahindra's Scorpio and Bolero, Tata Engineering's Sumo Plus range and Safari, and some variants of Toyota's Qualis.

On the other hand, the sales of vehicles with seat capacities of 10 or more passengers dropped almost 24 per cent at 3,863 units in October, from 5,049 units during the same month last year, according to the latest figures of the Society of Indian Automobile Manufactures.

This segment comprises Mahindra and Mahindra's soft-top vehicles and those meant for rural areas like the firm's Maxx and Tata Engineering's Spacio.

A similar trend is visible in the utility vehicles sales between April and October, when the sales of vehicles with capacities for up to seven grew 47.3 per cent, while those with capacities for 7-9 passengers grew 29.86 per cent.

On the other hand, the sales in the largest segment, comprising the more economical vehicles and carriers that can accommodate 10-13 passengers, declined 17.32 per cent during the period.

Automobile analysts said the drop in larger passenger vehicles sales was due to a sharp increase in the prices of diesel in the current fiscal, escalating the operating costs for rural transporters.

Also, the continued ban on new licences for soft-top vehicles in some states is hitting their sales.

"The growth in the sales of smaller but more luxurious utility vehicles can be because the top players are now marketing their products as an alternative to the C or D segment cars," an analyst at a leading brokerage firm said.

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