Hatchbacks will continue to exist despite ‘SUVisation’ of auto industry: FADA president

New Delhi: Entry-level hatchbacks will continue to retain their place in India’s passenger vehicle market despite the growing global trend of “SUVisation,” according to the Federation of Automobile Deal-ers Associations (FADA).

The debate has intensified following the GST 2.0 rate cut, which made small cars more affordable. Maruti Suzuki India, the dominant player in the segment, expects around 10 per cent growth in hatchback sales.

Hyundai Motor India, however, believes demand for micro SUVs such as Exter and Punch will rise at the cost of small cars, reflecting changing consumer aspirations.

“This ‘SUVisation’ is happening worldwide. It’s not because India has bad roads,” said FADA President CS Vigneshwar. While SUVs offer comfort, style, and safety, hatchbacks will retain relevance because “some people still want the hatches,” he added.

Vigneshwar noted that competition remains strong in the hatchback space, with multiple manufactur-ers offering products, unlike the mid-size sedan segment which is being squeezed out. “Hatches will exist, SUVs will exist, but sedans are getting squeezed,” he said.

Industry data shows entry-level hatchback wholesales have fallen by over 60 per cent—from 3.7 lakh units in FY19 to 1.44 lakh units in FY25. By contrast, overall passenger vehicle volumes grew 28.5 per cent in the same period, from 33.77 lakh units to 43.38 lakh units.

Maruti’s Senior Executive Officer, Marketing & Sales, Partho Banerjee, recently said domestic PV growth should stabilise at around 7 per cent from next fiscal, while small cars may expand faster at 10 per cent, aided by affordability measures such as income tax relief on annual incomes up to Rs 12 lakh, repo rate-linked lower EMIs, and GST cuts. He suggested this could encourage two-wheeler riders to upgrade to entry-level cars.

Hyundai’s COO Tarun Garg, however, argued GST benefits are not limited to hatchbacks.

“Exter and Punch never existed four years ago. The Rs 6-10 lakh segment earlier belonged to hatches, but now SUVs dominate due to rising aspirations,” he said. For SUVs under Rs 10 lakh, customers see the biggest benefit from the GST cut, he added.