For the first time in almost two years, sale of multi-utility vehicles (MUVs) and sports utility vehicles (SUVs) in India grew in single digits in April 2013, indicating that the Indian driver's love affair with these vehicles may be losing intensity.
Various factors — such as the rising cost of diesel, the fuel that powers a majority of utility vehicles in the country, and higher taxes imposed by the government in the budget — have made these vehicles more expensive and relatively more costly to drive.
The price differential between petrol and diesel is Rs 13.41 in Delhi and Rs 13.64 in Mumbai — a drastic drop from about Rs 25 a few months ago. This has contributed in large measure to the fall in the relative attractiveness of MUVs and SUVs.
“Our initial analysis shows that sales of SUVs, on which excise duty has been increased by 3%, have gone down by 14% in April 2013 compared to last year,” said Pawan Goenka, president, automotive and farm equipment sectors, Mahindra & Mahindra. “This is against the 24% growth in April 2012.”
The industry is divided on whether the segment will actually witness a decline in sales.
There is unanimity that even if SUVs don't go into a passenger car-like slump, the days of high double-digit growth rates may be over. “There is also a marginal shift in the market towards small sports utility vehicles," said Sandeep Singh, deputy managing director at Toyota Kirloskar Motor. "I believe their (smaller SUVs) sales will start improving after (the expected) good monsoons and during the festival season."