Compacts Driving Sales, Reviving Up Indian Car Market

NEW DELHI: In a country where cars are seen as an extension of one's social status, shrinking parking spaces and congested roads are compelling Indian buyers to shift focus to the smaller compact segment that still offers luxury and maximum bang for the buck, experts maintain.

Car manufacturers also are flooding the market with their mini sedans, priced between 500,000 and 900,000, and sports utility vehicles (SUV) and multi-utility vehicles (MUV) in the range of 600,000 to 1.2 million.

The previous United Progressive Alliance (UPA) government's policy of lower excise of eight percent for cars under four-metre length as compared to sedans with 20 percent and SUVs with 24 percent gave birth to this segment. The curent National Democratic Alliance (NDA) government's decision to continue with this policy has given a further boost to the segment.

Experts feel this segment is seeing a decent sales drive as it also offers the right combination of space, looks, affordability, luxury and, most importantly, better fuel economy and easy manoeuvrability in the city traffic, compared to full size sedans. Then, these vehicles are also quite comfortable to drive for the weekend getaways, which is becoming quite a popular recreation among youth today.

"The compant segment has picked quite fast in the last couple of years. Good looking cars at the right price have enticed a lot of buyers, especially those who have not been able to shift to an upper segment," said Kumar Kandaswami, senior director at Deloitte.

"The segment has been growing at a healthy rate of 15-16 percent, compared to the rest of the industry - which has even seen marginal de-growth," Kandaswami told IANS.

Features like touchscreen multi-information display, Bluetooth connectivity, projector headlamps, parking sensors, day-time lamps and CD players that were restricted to one segment above till a few years ago, have now made their way to compact cars as well, as auto makers lure the young tech-savvy buyers.

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