The compact SUV segment has emerged as the biggest beneficiary of the Goods and Services Tax (GST) cut, according to Hyundai Motor India’s senior management, as shifting consumer preferences continue to reshape the passenger vehicle market.
Managing Director and CEO of Hyundai Motor India, said that while growth is visible across all vehicle segments, compact SUVs are clearly outperforming others in the post-GST cut phase.
“All segments are growing, but there is a strong consumer preference for the compact SUV segment,” he said in a post earnings call on February 2, pointing to changing sales trends over the course of the year.
Sharing segment-wise data, he explained that hatchbacks have seen a marginal decline in their contribution to overall sales.
“From January to August, hatchbacks contributed 22.4% of the market, but from September to December this reduced to 21.4%,” he said.
This drop, he added, has been absorbed almost entirely by compact SUVs.
“The compact SUV segment went up from 22.1% to 23%. So, very clearly, the maximum benefit of growth from the GST cut has come to compact SUVs.”
Hyundai believes the momentum is not limited to urban markets alone. He noted that SUV penetration in rural areas is now slightly higher than in urban centres, driven by improving infrastructure and evolving consumer aspirations.
“The aspiration is the same in rural India as in urban India, and infrastructure improvement in rural areas has really helped,” he said.
The GST cut has acted as a catalyst, providing additional momentum to demand, though Hyundai maintains that growth has been broad-based. “GST has given a push, but we have seen growth across sectors,” he said, underlining that the overall market sentiment remains positive.
Hyundai’s own compact SUV offering, the Venue, reflects this trend. The model has garnered close to 80,000 bookings, underscoring strong consumer appetite for feature-rich, competitively priced SUVs in the sub-four-metre category.
Tata Nexon, Mahindra XUV3X0, Kia Sonet, Skoda Kylaq, Renault Kiger, Tata Punch, Hyundai Exter, Maruti Brezza and Kia Syros are some of the models in the sub 4-meter SUV segment. Last year the segment churned out 1.38 million units in sales.
Industry observers say the sustained rise of compact SUVs highlights a structural shift in buyer preferences, as customers increasingly favour higher ground clearance, perceived safety, and a more commanding driving position—benefits that compact SUVs offer at price points once dominated by hatchbacks and sedans.
With supportive policy measures like the GST cut and continued infrastructure development, automakers expect the compact SUV segment to remain a key growth driver in the Indian passenger vehicle market in the near term.
