Hyundai Sees SUVs Accounting for 75% of India Sales in Next 12-18 Months

Hyundai Motor India expects sport utility vehicles (SUVs) to account for as much as 75% of its domestic passenger vehicle sales over the next 12-18 months, up from 67% in the September quarter, as the company expands its SUV portfolio and bets on sustained consumer demand for the body style.

Speaking during the company's Q2 FY27 earnings call on Wednesday, Managing Director and CEO Tarun Garg said the contribution of SUVs could rise further as manufacturers introduce more models across different price points and powertrain options.

"I would not be surprised if we reach 75% within the next 1-1.5 years. And maybe forward there is still some possibility to move further up," Garg said.

Hyundai expects its second-half performance to be supported by two SUV introductions during H2 FY27. The company launched the Bayon on October 26 at a starting price of Rs 9.99 lakh, ex-showroom, expanding its portfolio alongside the Exter, Venue and Creta. Another SUV, including an electric offering, is part of its planned product expansion.

The outlook comes despite SUVs losing some share in Hyundai's domestic sales during the September quarter, as hatchbacks and sedans recorded faster growth.

According to Hyundai's Q2 FY27 investor presentation, SUV sales increased 12.6% year-on-year to 1,11,756 units, compared with 99,220 units in the corresponding quarter last year. However, their contribution to domestic volumes declined to 67% from 71%.

In contrast, hatchback sales increased 41.3% to 31,956 units from 22,620 units, raising their share of domestic sales to 19% from 16%. Sedan volumes grew 24.8% to 22,060 units, although their contribution remained steady at 13%.

Garg acknowledged the recovery in smaller cars, saying the GST reductions had improved affordability and helped revive a segment that had been losing ground over the past few years.

"First thing is we are very happy that all segments are growing. Because last few years, the hatch segment was continuously coming down," he said. However, he maintained that SUVs would grow faster than hatchbacks over the medium term, supported by changing preferences and the greater number of new models being introduced in the category.

"While both segments should grow, because India is a growing market, at the same time, the pace of growth of SUVs will be higher than hatches is what we believe in," Garg said.

He added that new product introductions were increasingly concentrated in the SUV market, further supporting the shift in sales mix.

The trend is also visible across the wider passenger vehicle industry. According to the Society of Indian Automobile Manufacturers (SIAM), utility vehicles accounted for 68% of India's passenger vehicle wholesales in Q2 FY27, with volumes increasing 34.2% year-on-year. Passenger car sales also recovered, growing 24.9% during the quarter.

Affordable SUVs Changing Customer Preferences

Garg said the availability of SUVs at lower price points was changing customer preferences, with models such as the Exter attracting buyers in segments traditionally dominated by hatchbacks. He pointed to the Rs 5.5 lakh to Rs 8 lakh price bracket, where buyers previously had fewer alternatives to conventional small cars.

Hyundai believes that models such as the Exter, Venue and Bayon allow customers to choose SUVs across different budgets without compromising on space, technology or features.

Garg said the Exter was witnessing particularly strong demand, supported by newer variants and its CNG offering.

The company nevertheless intends to maintain a presence across passenger vehicle categories, including hatchbacks such as the Grand i10 Nios and i20, and the Aura sedan.

Rural Demand to Support SUV Growth

Hyundai also expects demand from smaller towns and rural markets to support its SUV strategy.

Rural markets contributed a record 26.6% of the company's domestic sales in Q2 FY27, according to its investor presentation. Garg said SUVs accounted for approximately 68-70% of Hyundai's rural volumes, broadly matching their contribution in urban markets.

The company has been expanding its reach outside major cities, with around 60% of new sales network additions taking place in rural areas.

Despite concerns over deficient rainfall and its potential impact on agricultural incomes, Garg said Hyundai had not observed a slowdown in rural sales in the preceding six weeks.

"As of now, we believe rural will still outpace the urban growth going forward," he said, while acknowledging that the impact of weaker rainfall remained uncertain.
Hyundai's domestic sales increased 18.8% year-on-year to 1,65,772 units during the September quarter, supported by growth across SUVs, hatchbacks and sedans.