People are buying more utility vehicles than compact. Here’s why

The preference of customers has changed, thanks to introduction of compact SUVs, equipped with better dynamics and drivability.

The compact SUVs, which are priced almost at the same level of sedans, have changed the trend and now have become a preference among most of the car buyers.

This has also triggered a competition as now utility segment accounts for one in every four passenger vehicles sold.

One of the quick adapters of this trend was Maruti Suzuki, which has grabbed a significant market share, giving tough competition to Mahindra & Mahindra based on sales in the first seven months of this fiscal year.

Since last three months, Maruti is emerging as the winner in the utility segment.

As per the reports, sales of utility vehicles went up around 37% to 4,44,048 units between April and October, compared with 3,24,460 units a year earlier when the segment accounted for one in five passenger vehicles sold in the Indian market.

"The future of compact SUV is very bright, I expect the trend to continue. For OEMs (automakers) to be relevant in this segment, regular launches with better features are the keys to succeed," Abdul Majeed, automobile expert and partner at Price Waterhouse, told ET.

Mahindra, which was the leader in the utility segment, seems to be withering as its market share slipped to 30% from 36% in the April-October period, even as Maruti increased its share to 25% from 14%, helped primarily by the success of the Vitara Brezza. Mahindra's new products the like TUV300 and KUV100 did not do that well.

"Interestingly, passenger car OEMs like Maruti and Hyundai are able to gain strong footing in the UV segment due to changing preference towards compact UVs. Whereas, traditional UV OEMs like Tata Motors and M&M, having presence in chassis built rugged UVs, witnessed market erosion due to relative underperformance of the larger UV segment. Thanks to strong response to compact UVs, the share of petrol vehicle is likely to increase in the medium term," Subrata Ray, senior group vice president at ratings firm ICRA, told ET.