Demand for compact cars declines in India; Buyers preferring pre-used cars instead

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Lately, the demand for compact cars is declining in India, mainly hatchbacks. At the same time, the demand for pre-used compacts cars is rising. Entry Compact models like WagonR, Kwid, and Tiago are beginning to generate a flat or negative growth rate in the market. 

For the past few years, the number of hatchbacks plying on the road was increasing. In the daily traffic and crowded streets, a hatchback is a delight because it can be manoeuvred easily and can zip-zap easily when compared to sedans or SUVs. This year and in the coming 1-2 years, many compact cars are expected to launch. But, the latest report from ET Auto states that the demand for new compact cars in India is declining. This segment is beginning to register a flat or a negative growth rate in the market. Now, the compact cars usually include premium compact hatchbacks cars like Swift, Grand i10 and all. They also include entry-level hatchbacks like Wagon R, Kwid, and Datsun GO. The report says that the entry-level segment is declining and one of the strongest segment, the premium hatchback one is just giving a 9% growth rate.

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Also Read: Electric Vehicles in India to soon attract a Subsidy of 1.4 lakh; High-End Cars May Get Subsidy Up To Rs 4 Lakhs

The premium compact B+ segment comprising of Swift and Grand i10 is one of the strongest segments. In July, most of the segments witnessed a great downfall, but only this premium segment showed a positive growth rate of 9%. Here is a true fact. Now, India’s best selling car is not Alto but is Maruti Suzuki Dzire.

Currently, the total segment sales are around Rs 1.61 Lakh units. In April and May, the segment hit peak sales achieving 1.82 Lakh units. The current sales figures are similar to that in 2015, where it was 1.65 Lakh units.

Also Read: Soon a Maruti Suzuki for every Pocket for every Lifestyle!

Sandeep Aggarwal, Founder-CEO of Droom, said to ET Auto that, “First-time car buyers are now increasingly looking at used cars as an option thus skewing the sales pattern of new vehicles. First-time car buyers were typically the largest customer segment that drove compact car sales, particularly the entry compact cars”.

Other reports also say that, slowly, the compact SUV and the sub-4 meter compact SUV segment might be the best selling in some. Cars like the Hyundai Creta, Ford Ecosport, and Maruti Vitara Brezza are dominating their segments. So, various reports suggest that the compact SUV segment is increasing the overall passenger vehicle sales. This is mainly due to affordable pricing and good fuel mileage offered by these cars.

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