Compact hatchback cars like Swift and Grand i10 lure first-time buyers

NEW DELHI: First-time buyers are returning to the car market and lapping up more premium hatchbacks like the Swift, Celerio and i10 Grand than the entry-level models they preferred in the past. Sales of entry-level or mini cars, a segment ruled by Maruti Suzuki's Alto, and premium or compact hatchbacks have together expanded as much as 40% in August from the previous month, according to model-wise numbers for the month released recently.
The compact segment has in fact grown more than 50% sequentially, compared with a 20% increase in the sales of entrylevel cars. "The growth in mini and compact segments show that the first-time buyers are coming back," said Subhrata Ray, senior group vice president at ICRA Rating.
The numbers also indicate changing consumer preference towards better engineered and comfortable vehicles with higher safety features than the bare four-wheeler they bought as their first car for years.
"Previously it used to be that the first-time buyer would buy a mini car first, then graduate to compact. But now the case has changed; a first time buyer can directly buy a compact hatchback also," said Abdul Majeed, partner automotive practices at PwC.
The return of first-time buyers in large numbers indicates the recovery that the Indian car market has been witnessing for a few months now is going to gain strength, say industry experts.
Jnaneswar Sen, senior vice president, sales & marketing, Honda Cars India, said increased sales in rural areas and small towns also augur well for the industry and "is a significant element which establishes the return of recovery".
Rakesh Srivastava, senior vice president of marketing and sales at Hyundai India, credits the government's decision to continue with a cut in excise duty, as well as stable interest and inflation rates, for the pickup in the automotive industry.
"We expect this festive period growth to be in the range of 15%-20% over last year," Srivastava said.
The past month saw the Alto, Maruti's entry-level car, returning to the top spot on sales charts, a position it had lost to Maruti's own compact sedan Dzire the previous month.
Alto sales grew to 21,553 units in August from 16,997 units a month prior, while Dzire numbers fell to 17,801 from 18,634.
Maruti SuzukiBSE continues its dominance with its five models making it to the top 10 cars by sales in August. In fact, its Alto, Dzire, Swift and WagonR take the top four spots, in that order, and the Celerio comes in at the eighth spot.