The large number of compact sport utility vehicles showcased at the New Delhi Auto Expo 2016 indicates growing competition in this niche segment, which is likely to see the introduction of at least 18 new nameplates in the next three years.
IHS Automotive Perspective
Significance
India's 2016 New Delhi Auto Expo started yesterday (3 February), with a number of automakers revealing their production-ready and concept vehicles. Important among the products revealed at the show are the Maruti Vitara Brezza, the Chevrolet Essentia, the Tata Kite concept, and Hyundai's compact crossover concept.
Implications
Most of these vehicles are below four metres in length to take advantage of lower excise duty rates in India. Following the launch of an increasing number of compact sedans in recent years, automakers are now focusing on offering the sport utility vehicle (SUV) bodystyle in the small footprint.
Outlook
IHS Automotive forecasts that the SUV bodystyle will be a key volume driver in India in the coming years. From nearly 165,100 units in 2015, IHS Automotive expects the compact SUV niche segment to grow to 529,800 units in 2018 in the Indian market.
Automakers made a string of product unveilings yesterday (3 February) at the biennial 2016 New Delhi Auto Expo. As is the case at most motor shows, automakers are showcasing a wide variety of vehicles at the expo, but compact vehicles dominate – an umbrella term for vehicles aimed at urban buyers with nuclear families. Several of these vehicles have been kept below four metres in length to enable them to benefit from lower taxation in India. As a result, most of these vehicles are priced competitively, although some automakers have gone beyond the four-metre threshold for their compact offerings. Below, IHS Automotive looks at the most important models revealed at the show.
Passenger vehicle market leader Maruti Suzuki has taken the wraps off its Vitara Brezza compact sport utility vehicle (SUV). The sub-four-metre vehicle is currently powered by a 1.3-litre diesel engine, while a gasoline (petrol) powerplant for the vehicle remains under development. The diesel engine is mated to a 5-speed manual transmission. The vehicle will be made available for sale in the next couple of months. Maruti has also unveiled its Ignis concept mini-crossover at the event, although the timing of a market introduction for this vehicle is currently unknown.
Datsun Go Cross
Hyundai's growing interest in the sub-four-metre segment is evident as the South Korean automaker showcases a concept crossover codenamed the HND-14. The project is currently at the study stage, and so it is likely to be a few years before the vehicle is eventually launched. Nevertheless, comments by company executives indicate that the project is a certainty. Hyundai India senior vice-president Rakesh Srivastava said that the HND-14 would eventually join Hyundai's family of SUVs, which includes the Santa Fe, Creta, and the recently unveiled Tucson. With a total length of 4.47 metres, the all-new Hyundai Tucson will be positioned between the Santa Fe and the Creta when it is launched in India later this year.
There was a surprise from General Motors (GM), which unveiled a compact sedan named the Chevrolet Essentia. The model was virtually unannounced, but the vehicle will be made available for sale in 2017. Launching in the same year will be the Chevrolet Spin multi-purpose vehicle (MPV). The Beat-based compact sedan will join the competition in this segment, which has recently seen another new entrant in the form of the Volkswagen (VW) Ameo.
Honda meanwhile staged the unveiling of the BR-V SUV. Although the SUV is a three-row, seven-seat model, its length of 4.45 metres makes it a compact package. The SUV is based on the versatile GSP platform that also underpins the Brio hatchback, Amaze sedan, and Mobilio MPV. Pricing of the model will be revealed later this year when it is scheduled to be launched for commercial sales.
Among other notable unveilings at the event is Tata Motors' new compact sedan codenamed the Kite 5. The sub-four-metre vehicle is a sedan version of the automaker's latest hatchback that was originally due to be named the Zica. However, following the outbreak of the Zika virus in several countries, the automaker has decided to replace this moniker with an as-yet undecided new name.
Another important new model showcased at the expo is the Datsun Go Cross, which is expected to make its way to the market in the second half of 2017. More details regarding pricing and specifications of the model will be revealed at a later date. The model derives many of its design cues from the Datsun Go hatchback, but its usage of roof rails, body cladding, alloy wheels, and a bigger grille lends the model a familiar yet distinct look. Once launched, the model will be a serious attempt to inject some vibrancy into the budget brand, which has so far remained restricted to hatchbacks and MPVs.
Nissan's alliance partner Renault has revealed two variants of its popular Kwid hatchback, as well as two concepts based on the hatchback. One of the new variants – the Kwid 1.0-litre SCe – is powered by a 1.0-litre engine, marking an improvement over the 800cc engine in the current model. Another version – the Kwid Easy R – is equipped with automated manual transmission (AMT). Both variants are intended for market introduction and will be launched later this year.
Outlook and implications
The allure of the sub-four-metre category and the resulting lower excise duty rates in India is evident in the way automakers have lined up their products for this year. Vehicles shorter than four metres and powered by either a 1.2-litre gasoline or 1.5-litre diesel engine or smaller are considered small cars in India and attract an excise duty of 12%. Vehicles outside this classification are taxed at varying rates, with 24% acting as the base level. The difference in taxation amounts to around INR50,000 (USD736) for a compact sedan – enough to create substantial price gaps and to allow automakers to offer SUV and sedan bodystyles at prices marginally higher than or matching those of premium hatchbacks.
Given the regulatory framework in India, small cars or compact vehicles remain an important source of strength for the overall market. Outside of the expo, Mahindra & Mahindra (M&M) has already launched its TUV300 and KUV100 sub-four-metre SUVs in recent months.
Automakers' experiments with SUV and sedan bodystyles in the small-footprint category are expected to continue in the coming years. We forecast that the SUV bodystyle will be a key volume driver in India in the coming years. From nearly 165,100 units in 2015, IHS Automotive expects the compact SUV niche segment to grow to 529,800 units in 2018 in the Indian market. Driving this growth will be at least 18 new nameplates. Important among the gainers in this category are expected to be the Maruti Suzuki Vitara Brezza and Ignis, the Hyundai Creta, and the Mahindra KUV100.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.