India’s car market has changed a lot in recent years, and the country’s passion for cars is taking on a new meaning, with SUVs emerging as the top choice. This change is fueled by shifting consumer preferences and economic growth.
More people, especially the growing middle class, see owning a car as a symbol of freedom. The number of cars on Indian roads jumped from 19 million in 2012 to 49 million in 2022, and car ownership per 1,000 people doubled from 17 to 34. But as cars become more common, their meaning is changing, reflecting a shift in how Indians view mobility and status.
Source: LiveMint
The Rise of SUVs in India
India’s SUV market is growing rapidly, valued at USD 18.13 billion in 2024 and expected to reach USD 33.85 billion by 2030, with a CAGR of 10.97%.

SUVs now dominate the Indian car market, accounting for over 50% of passenger vehicle sales in the 2023-24 fiscal year—a major jump from previous years. Just five years ago, hatchbacks accounted for one in two cars sold in India. Today, that number has dropped to one in four, while SUVs now make up more than 50% of new car sales.
This shift is highlighted by Hyundai Motor, a South Korean company whose local arm recently raised $3.3 billion in India’s largest-ever IPO.
Factors Driving the SUV Boom
The Role of Road Conditions in Boosting SUV Sales
One significant factor driving the surge in SUV sales is the state of India’s road infrastructure. Outside major cities, poorly maintained roads with large potholes and uneven surfaces are common. Additionally, across the country, road-traffic departments often install poorly designed speed bumps that can wreak havoc on both vehicles and passengers.
Given these conditions, ground clearance—the distance between a vehicle’s underside and the road surface—has become a crucial factor for Indian car buyers. SUVs, with their higher ground clearance, are seen as the ideal choice to navigate these challenging road conditions without causing damage to the vehicle or compromising comfort.
Improved Road Infrastructure Fueling the SUV Boom
Despite the poor condition of roads in and around major cities, the rapid development of high-quality roads and highways across India has played a key role in the country’s SUV boom. In recent years, India has added tens of thousands of kilometers of well-built motorways, which has significantly enhanced travel opportunities. As a result, weekend getaways and day trips have become increasingly popular.
- According to Mahindra & Mahindra, a leading SUV manufacturer in India, a strong love for road trips has developed, with driving holidays now considered the most affordable vacation option. Also, This shift in consumer preferences is evident in the remarkable success of Mahindra’s latest rugged off-roader, which received 176,000 bookings within the first hour of its release.
Safety Becomes a Key Priority for Indian Car Buyers
A significant shift in car buyers’ priorities is safety. Until recently, safety wasn’t a top concern, but the Tata Nexon changed that. This compact SUV was the first to earn a five-star safety rating in international tests, and it was prominently highlighted. Buyers began valuing safety over other features, especially with highways allowing higher speeds. The Nexon’s success made it India’s best-selling SUV from 2021 to 2023, and safety ratings now feature heavily in car ads.
Shifting Priorities in Car Purchases
A significant shift in car buying habits is the growing emphasis on value over cost. According to industry experts, earlier, buyers focused on mileage, but now they are more willing to pay extra for a better experience. The average price of a car increased by a third in the past five years, from 491,000 rupees to 659,000 rupees, driven by both rising car prices and a demand for higher-quality vehicles.
Rising Demand for Premium Features
The shift is also reflected in consumer choices, with top-end variants of cars now making up two-thirds of sales, up from less than half before the pandemic. This mirrors trends in other products, like mobile phones, where premium models such as the iPhone are seeing growth. The availability of easy financing allows buyers to focus on affordable monthly payments rather than high upfront costs.
Technology and Entertainment Drive Purchases
Consumers are also increasingly prioritizing technology in their cars. With the spread of affordable internet, even budget car buyers expect features like touchscreen consoles. Given the time spent in traffic, entertainment and tech features are now critical in purchasing decisions, and more decisions are now based on the tech offered in cars.
Government Support and Evolving Taxation Policies
Government initiatives, such as the implementation of the Goods and Services Tax (GST), have streamlined the tax process, making SUVs more affordable for consumers. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which offers incentives for hybrid and electric models, has also prompted manufacturers to expand their portfolios with eco-friendly SUVs.
Advancements in Automotive Technology
Indian buyers are increasingly seeking vehicles that prioritize safety, fuel efficiency, and advanced technology. Modern SUVs cater to these preferences with features like driver assistance systems (ADAS), premium interiors, and panoramic sunroofs. In addition, advancements in engineering have made SUVs more fuel-efficient, addressing concerns over higher operational costs.
Diverse Offerings:
Automakers are introducing a wide range of SUV models across various price points, making them accessible to a broader segment of the population.
Source: LiveMint/ techsciresearch.com
Impact on Small Cars and Sedans
The surge in SUV sales has had a noticeable impact on other vehicle segments. The share of hatchbacks, once the staple of Indian car buyers, has declined to around 28% in FY24, down from higher percentages in previous years. Similarly, sedans have seen their market share slip to single digits, closing the year at 9% compared to 14.3% at the end of FY20.
Automakers Responding to the Trend
Recognizing the growing demand for SUVs, both domestic and international automakers are expanding their SUV portfolios:
- Maruti Suzuki: Traditionally known for its small cars, Maruti Suzuki has increased its focus on the SUV segment, with SUVs now accounting for approximately 22% of its sales, up from 11% at the end of the previous fiscal year.
timesofindia.indiatimes.com - Hyundai Motor India: Hyundai has been actively introducing new SUV models to cater to the rising demand. The company plans to launch its first locally-produced electric SUV by early next year and at least two gasoline-powered models by 2026. This strategy aims to regain market share amidst growing competition from domestic manufacturers.
reuters.com - Mahindra & Mahindra: Mahindra has experienced a significant boost in SUV sales, with a 19% increase in volumes, significantly outpacing the industry’s overall decline. The company’s SUV portfolio now makes up over 50% of India’s car sales.
reuters.com
Challenges Ahead
While the SUV segment is booming, automakers face challenges such as:
- Intensifying Competition: The surge in SUV demand has led to increased competition among manufacturers, prompting continuous innovation and frequent model launches.
- Rising Costs: Higher raw material costs and increased expenses have led to higher car prices, which could impact consumer purchasing decisions. For instance, Maruti Suzuki faced a 15.5% increase in expenses, with inventory clearance costs reaching 6.8 billion rupees.
reuters.com - Economic Factors: Inflation and other economic factors can influence consumer spending power, potentially affecting the sustained growth of the SUV market.
The Road Ahead
The Indian automotive market is clearly gravitating towards SUVs, driven by changing consumer preferences and economic developments. As automakers adapt to this trend by expanding their SUV offerings, it will be interesting to observe how the market evolves and how other vehicle segments respond to this shift.
In conclusion, India’s transformation into an SUV-centric market reflects broader changes in consumer behavior and economic conditions. As the country continues to develop, the automotive landscape is likely to see further shifts, with SUVs playing a central role in shaping the future of mobility in India.
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FAQ
What’s driving India’s SUV boom?
Rising disposable incomes, improved road infrastructure, and a growing preference for larger, safer vehicles are fueling SUV demand. SUVs project status and offer better ground clearance for varied terrain, making them appealing to Indian consumers.
How big is the SUV market expected to become?
The Indian SUV market is projected to more than double, growing from $18.13 billion in 2024 to a substantial $33.85 billion by 2030. This indicates a strong and sustained growth trajectory for the segment.
Which SUV segments are leading the growth?
Compact SUVs and mid-size SUVs are currently the fastest-growing segments. They offer a balance of size, features, and fuel efficiency, making them suitable for both city driving and occasional highway trips.
What impact will this growth have on the auto industry?
The increasing popularity of SUVs will likely lead to increased investments in SUV production and development by automakers. It may also impact the production of smaller car segments as consumer preferences shift.
Are there any challenges to this growth?
Rising fuel prices, increasing traffic congestion in urban areas, and parking challenges could pose some limitations to the rapid growth of the SUV segment in the long run.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.