India is still buying small cars, but not necessarily cheaper ones.
Consumers are willing to shell out more for a powerful, spacious and feature-rich compact car rather than go for modest models that are easier on the pocket.
Premium hatchbacks, such as the Maruti Swift and Hyundai i20, are being preferred over their cheaper counterparts such as the Maruti WagonR, Hyundai Santro, Hyundai i10, Chevrolet Spark and Tata Indica.
In 2011-12, Swift sales surged enough (153,529 units) to make it the second most popular car, behind only the entry level Maruti Alto (308,288 units).
The i20 (77,456 units) displaced the good old Santro (69,969 units) from the list of top 10 best-selling cars despite quoting a far higher price. Better value for money and the diesel option are aiding this shift.
"The big reason for the market shifting from Alto, Santro and WagonR to Swift or i20 is the availability of a diesel version," said Tarandeep Ghai, principal (auto sector), Boston Consulting Group.
"In the last one year, the demand has shifted sharply in favour of diesel cars and none of the mini cars offer this. There is also a general trend towards more feature-rich and spacious compact cars," said Ghai.
Swift would have even outsold the Alto if the loss of 52,000 units during the labour strike at Maruti's Manesar plant last year and its waiting list of 1.35 lakh units was taken into consideration. According to IV Rao, managing executive officer (engineering), Maruti Suzuki India Ltd, "If the demand for diesel cars continues to grow like it has this year, the Swift will soon overtake the Alto. Consumers are not dissuaded even by its huge waiting period."