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In FY 2024–25, SUVs made up roughly 65% of all passenger vehicles sold in the country. Just pause there for a second. Two out of every three cars sold in India are now SUVs or utility vehicles.
A decade ago, in 2016, that number was around 17%. Back then, SUVs were aspirational. Today, they are default.
The overall passenger vehicle market touched an all-time high of about 4.3 million units in FY25. SUVs were the growth engine behind that record. Meanwhile, hatchbacks, once the undisputed kings of Indian roads, have shrunk dramatically.
In 2019, they commanded nearly half the market at around 47% share.
By 2025, that had fallen to roughly 22-23%. Sedans hover in single digits, about 8-9%, surviving largely on fleet demand and budget buyers.
If you are wondering whether this is just a temporary phase, the answer is no.
Carmakers have already rearranged their entire playbook around this shift.
Look at January 2026 sales numbers.
Maruti Suzuki sold about 1,74,529 passenger vehicles. Tata Motors followed with 70,222 units. Mahindra clocked 63,510. Hyundai did 59,107. Toyota and Kia sat in the 30,000 and 27,000 range respectively. MG and Renault were much smaller.
When you look at the portfolios driving these numbers, one pattern stands out. Almost every high-volume product in that list is an SUV or a crossover. The Brezza, Nexon, Punch, Scorpio, Creta, Grand Vitara. The market leaders are riding tall.
So why did this happen?
Part of it is brutally practical. Indian roads are not gentle. Potholes, uneven surfaces, aggressive speed breakers and waterlogged monsoon streets are not rare exceptions. They are routine.
High ground clearance is no longer a luxury feature. It is peace of mind. An SUV simply feels more capable in these conditions. Even if 90% of your driving is urban, that 10% of rough patches influences your choice.
Next comes the pricing.
Small cars are not that small in price anymore. Emission standards has become stricter and so has safety rules. More these cars needed more electronics, better structures, more compliance.
This made the humble hatchback more expensive. The price gap between a premium hatchback and a compact SUV narrowed to a point where stretching your EMI by a few thousand rupees felt manageable.
If you are already spending eight or nine lakh, why not go up to ten or eleven and get the bigger car? That mental calculation alone has nudged lakhs of buyers upward.
And let us be honest. There is aspiration involved. A taller car carries a different presence. It signals upgrade. In Tier 2 and Tier 3 cities especially, an SUV is visible success. Families sit a little prouder in one. It is not just about mobility. It is about arrival.
Manufacturers have not resisted this wave. They have surfed it. Mahindra has openly said it will not build sedans or hatchbacks. Its identity is anchored in SUVs.
Tata Motors leaned into this early. The Punch, a micro SUV, effectively replaced the role of entry-level small cars for many first-time buyers. The Nexon became one of the most consistent performers in the market. Even Maruti Suzuki, once synonymous with small cars, is now pushing Brezza, Grand Vitara and Fronx as key growth drivers.
In 2025, the number of all-new mass-market hatchback or sedan launches was negligible compared to the flood of SUVs and crossovers. Carmakers had allocated the capital where margins were better. And SUVs typically carry higher average selling prices and fatter margins.
Of course, it is not all smooth sailing. Intense competition in the eight to fifteen lakh bracket means dealerships sometimes sit on higher inventory and offer discounts. We have seen periodic dealer-level price cuts and year-end schemes. Structural dominance does not eliminate cyclical pressures. If interest rates rise sharply or fuel prices spike, higher ticket purchases can slow. But the underlying direction remains clear.
What we are watching is not a fad. It is a graduation. The Indian car buyer has moved from purely functional decision-making to a blend of practicality, aspiration and perceived safety. The hatchback is increasingly seen as a compromise. The SUV is seen as the balanced choice.
A decade ago, the question in Indian households was, which small car should we buy? Today it is, which SUV fits our budget?
That shift, from small car nation to SUV-first market, tells you something deeper about where India stands economically and psychologically. Rising incomes, expanding highways, easier financing and changing preferences have converged at the same time. When those forces align, categories get redefined.
And right now, in India, personal mobility wears a taller stance and bigger wheels.
