The auto industry is still reeling from the ups and downs of the economy and government policies. This has significantly impacted the growth of several segments of automobiles. However, certain segments are showing signs of revival as other economic indicators and market demand for several features amongst these segments drives sales. Sports utility vehicles (SUV) are known for their ruggedness and aggressive design often defined as “a light truck-like vehicle used for personal transport.”
The vehicle type is characterised by high H-point, high ground clearance, and is usually equipped with all-wheel drive or four-wheel drive ( AWD/4WD). Traditionally it hold its appeal especially amongst those who need it for off-roading due to unstable terrain. With the wide range of SUVs, one is spoilt for choice as there are several types of SUVs in the market to suit a variety of needs.
Current market trends in SUV
In FY2017 and H1 FY2018, the SUV segment has consecutively done better than the other vehicle segments. In FY2017, the SUV segments have sold 7,61,997 inputs marking a 29.9 per cent year-on-year (Y-o-Y) increase from FY2016. In H1 FY2018, the segment has recorded an increase of 17.8 per cent, selling 4,40,010 units. Indian Credit Ratings Association (ICRA) states several factors that have influenced a positive growth in the segment. One of the main reasons is the improved consumer sentiment towards SUVs. That can be attributed to the aggressive marketing of SUVs by OEMs and new and consistent model launches in certain types of SUVs that are generally preferred by consumers. Rising disposable income, declining cost of ownership, and lowering EMI rates are also noted as key factors that influence consumers’ purchasing behaviour.
SUVs are not only doing well in the urban area, but are showing a good increase in sales even in rural India. The rural segment accounts for 25 to 27 per cent of the domestic passenger vehicles sales and is doing well due to adequate rains in the monsoon season. Coupled with the issuance of the seventh pay commission, the rural is predicted to improve in the second half of the fiscal year. In H2 FY2018, due to these factors, the SUV sales will see some consistency, if not increase.
The urban contributors to growth are more or less similar in terms of income, along with factors like the festive season and moderate inflation which influences buying patterns. ICRA, however, notes that there has been some kind of slowdown in purchase from cab aggregators due to reduction in incentives and low financing. The SUV segment is showing a significant pick-up considering the impact demonetisation has had in the subsequent quarters post November 2016.
Considering the domestic and exports angle, the exports wholesales number has witnessed a double digit decline rate (-12.9 per cent) due to decline in demand from key export markets or production strategy by OEMs to shift some of production out of India.
Domestic wholesale dispatches have grown by 13.4 per cent in the second quarter of FY2018 post the impact of GST implementation. The inventories were re-stocked by dealers and prices were also slashed on account of festivals like Navratri and Diwali. The domestic sales of PVs in India has 3,00,000 units which ICRA notes as the highest ever in the history of Indian PVs.
While buying UVs customers tend to keep in mind several factors relating to the cost such as fuel, insurance, maintenance and EMI. While diesel is the primary fuel for SUVs, generally among PVs diesel variants were preferred until now. The price gap between diesel and petrol has become significantly lesser over the years as the price of petrol has been gradually increasing. The tilt towards the diesel variants in smaller PVs will become smaller and smaller. Suprisingly this will not lead to too much of a decline owing to the rise in the sale of SUVs.
ICRA expects the shares of diesel PVs overall to decrease to 36 to 38 per cent, stabilising to 33 to 35 per cent, again owing to the SUV segment.
Certain policy changes, however, may negatively impact the sale of SUVs in the future. The implementation of BS VI standards call for cleaner fuels to be used in vehicles by FY2020. Fuels like CNG and LPG would be adopted or there might be a subsequent regulatory ban on diesel as a fuel for transport like taxis.
Preferred UV segment
The many SUV segments comprise of mini SUVs, compact SUVs, crossovers, mid-sized SUVs and full-scale SUVs. A general trend amongst first time buyers (FTBs) has been to purchase sedans or hatchbacks, however, now several FTBs go for a compact SUV. A compact SUV, such as Nissan X-Trail or a Renault Duster, is a little bigger than a crossover SUV (based on a car structure). This feature of the compact UV makes it particularly appealing among consumers as it has a monocoque build, as opposed to the truck chassis built that full scale SUVs have. That makes it easy to drive and manouevre through urban traffic and congested roads while offering some of the ruggedness of an SUV.
The sub-segment has, in fact, been so popular that ICRA has recorded that the mid-size vehicle segment among passenger vehicles generally is witnessing a pressure due to the competition offered by compact SUV range. So much so, even the price range of the two segments overlaps, falling in the Rs 7 lakh to Rs 12 lakh range. This trend is even impacting the growth in the small passenger vehicle segment due to preference by first time buyers.
With the appeal that compact UVs have, steady players in the segment such as Mahindra and Mahindra, Tata and Toyota have experienced a decline in market share owing to the lack of compact UVs in their stables. On the other hand Maruti Suzuki India Limited (MSIL) and Hyundai have experienced a steady growth in market share. MSIL’s presence is driven by its Ertiga, Brezza, and S-Cross making it the foremost beneficiary of this trend, notes ICRA.
Over the past few quarters since FY2016, compact-sized SUVs have shown a steady growth rate, marking a 70.7 per cent YoY increase in Q1 FY2017 as opposed to the negative growth registered in Q1 FY2016.
As for FY2018, the sub-segment has registered a 28.4 per cent YoY growth in the second quarter and a 19.4 per cent YoY growth in the first quarter.
Safety features In SUvs & Premium Cars
Since SUVs are larger in size than normal cars, safety should be a foremost feature of SUVs. According to Amey Amanaji, Assistant Manager- Automotive and Transport- Research and Consulting, Markets and Markets, some other things to consider are the high centre of gravity and the H-point.
“Majority of the vehicles from SUV segment were found to be installed with basic safety features such as ABS and airbags. Curtain airbags is a new trend found in the SUV segment to provide better safety for passengers,” he said.
“Mid- and full-size SUVs have additional safety features such as anti-roll system, blind spot detection, rear park assist, HUD, electronic stability control, emergency brake assist,” added Amanaji.
Premium SUVs were equipped with smart safety systems such as front collision warning, active anti-roll assist, road sign recognition, lane assist, collapsible steering column, head protection system as well, notes Markets and Markets.
The segments that possess these features see the most sales growth. This also explains the popularity of the compact and crossover SUV segment. However, certain features are present only in large scale SUVs and that is what drives their demand.
“SUVs are usually known for AWD drive. However, this feature is optional or rare in mini, sub-compact, and compact SUVs these days. These SUVs are usually front wheel drive, and owing to fuel efficiency reasons the AWD feature is optional. This trend is usually observed in developing countries.
However, the full size and premium SUVs are installed with AWD systems. The driver is presented with drive or terrain options, which can be selected based on simple select (electronic shift on the fly). Some of the all-wheel drives are now automatic, where driver need not change the drive mode. Vehicle judges the terrain and can adjust the suspension height and AWD requirement.”
Hill descent control (HDC), a driver assistant system in four-wheel drive vehicles, can be activated with the press of a button. Hill Descent Control (HDC) holds the vehicle steadily at a pre-determined speed, helping with the job of brake control so that the driver can concentrate completely on steering. This makes the potentially difficult task of driving down a steep hill or over rough ground easy. When travelling at less than 35 km/h, HDC assists you by reducing you to a constant speed of approx. 7 km/h, or 6.5 km/h when reversing. HDC is particularly helpful when driving on changeable, lose or slippery downhill surfaces, such as gravel, snow or grass. Together with ABS, it ensures excellent stability while still preventing the wheels from locking if you apply the brakes on a slope. This prevents the vehicle from skidding and permits you to retain control over the steering.
Even when applying the full force of braking power, the vehicle remains under complete control thanks to the antilock brake system. It uses precise regulation of the braking pressure on the individual wheels to ensure that the vehicle can always be steered easily. ABS prevents the wheels from locking, regardless of the road surface’s friction coefficient and the applied brake pressure.
Dynamic stability control (DSC) adds to safety by facilitating vehicle control even in adverse driving conditions or on tough surfaces. It recognises the risk of skidding before it occurs and stabilises the car in milliseconds. The traction mode control in dynamic traction control (DTC) allows increased wheel slip to enable more dynamic driving.
Crash sensors in the A and B columns and in the doors of the vehicle register an accident at the earliest moments and react within milliseconds. The correct airbags are deployed to the appropriate degree, depending on which seats are occupied and the severity of the impact. Seatbelt pre-tensioners and the optional active headrests are activated at the right moment. If necessary, the battery and generator are disengaged and fuel pump deactivated to reduce the danger of fire. The central locking system unlocks all the doors and the cabin light and warning lights are illuminated.
For example, BMW has a restraint system for the driver and front passenger, comprises three-point seat belts combined with integral tensioners and force limiters. So in the event of a collision, passengers are held safely in their seats. The seat belt buckles in the rear are marked to avoid them being incorrectly fastened.
The OEM also has a safety feature in its tyres called Run-Flat tyres. These tyres remain functional even after a complete loss of pressure. With runflat tyres fitted, one can continue driving for up to a speed of 80 km/h without any significant loss in vehicle stability. Hence, a spare tyre is no longer required, reducing vehicle weight, enhancing performance and reducing fuel consumption.
OEMs of UV and premium car segments are also catering to the shifting trends in the auto industry in general along with the trends looked for in the sub-segments.
New-age trends in premium cars & SUVs
One of the raging trends is the adoption of EVs. Electrification and hybridisation of vehicles is one of the moves towards this trend. As many OEMs are following suit to meet with the government’s goals of making all cars electric by 2030, one can see a huge upheaval in all segments. However, SUVs seem to be the only segment lagging behind.
“As of now, electrification trend has not influenced the SUV segment much. One of the key reasons is size and weight of the vehicle, which would require high battery capacity and can influence the vehicle range. Tesla X is the only electric SUV model, whereas, most others (like Porsche Cayenne Hybrid, Chrysler Pacifica Hybrid, Lexus RX, Toyota Highlander, Acura MDx, etc.) are hybrid variants,” observes Amanaji.
However, few OEMs have launched electric SUV concepts such as Jaguar i-Pace, Mercedes Benz EQ, Chevrolet Bolt (crossover), Audi e-Tron, BMW i5, and other OEMs such as Hyundai and Volkswagen are planning to launch their models post 2018.
As for electrification, SUVs use hydraulic power steering, and shifting to electro hydraulic power steering (EHPS) can reduce the vehicle weight thus giving way to lightweighting trend. Future technologies such as electric compressor, electric vacuum pump, electric water pump, and electric oil pump can help in overall vehicle weight reduction. However, for these types of electrification, the industry will have to wait till the introduction of 48V architecture (mild-hybrid) in IC engine vehicles.
The premium car segment is also gearing up for this change. For example, by 2025, the company will offer 25 fully electric and plug-in hybrid models worldwide. The BMW Group has delivered more than 100,000 electrified vehicles to customers worldwide in 2017, as promised at the beginning of the year.
“The world we live in is changing and a changing world constantly demands new ideas. The global automotive industry is witnessing a paradigm shift from the conventional combustion engine to sustainable mobility solutions. This iconic change is inevitable. Even here in India. With growing urbanisation and increasing environmental challenges, we need to answer the mobility needs of the Indian luxury consumer living in the upcoming megacities of the country,” says Vikram Pawah, President, BMW Group India.
For BMW i electric brand, which was founded in 2011, the company has already secured the naming rights from BMW i1 to i9, as well as from BMW iX1 to iX9. Next year will see the launch of the BMW i8 Roadster, followed in 2019 by a fully electric MINI; in 2020, by the electric version of the BMW X3 and in 2021 by the brand’s new technology flagship, the BMW iNext, which will combine electro-mobility with autonomous driving and new interior connectivity options for the first time in a series-production model.
With increasing stress on emission and fuel efficiency OEMs need to constantly take steps to keep in line with government regulations or industry trends like light-weighting, downsizing and electrification.
BMW EfficientDynamics is an innovative package for reducing fuel consumption and emissions while simultaneously increasing Sheer Driving Pleasure unique to BMW. The new Eco Pro mode supports an extra-efficient and economy-conscious driving style and allows average fuel consumption to be reduced by up to 25 per cent, with a corresponding increase in driving range. Thanks to the wide-ranging and detailed aerodynamics optimisation, BMW vehicles have an outstanding drag coefficient. This includes measures such as large scale under floor panelling and the Air Curtains in the front apron, which significantly reduce air resistance around the front wheels. The ideal 50:50 weight distribution between the front and rear axles makes the vehicle superbly agile. An intelligent lightweight construction reduces fuel consumption and improves performance. It is an excellent example of how efficient driving combines perfectly with dynamic driving. All BMW cars available in India feature the BMW EfficientDynamics technologies.
Light-weighting is another trend as witnessed by the industry. “Euro VI, EPA 10, BS VI, and China V are few key existing/upcoming regulations that are projected to strengthen the light-weighting trend in automotive industry, all around the globe,” notes Amanji.
Some of the light-weighting trends in SUVs are include the use of alloy wheels made of aluminum or magnesium. Wheels with tires contribute to approximately 60 to 65 kg of weight in passenger vehicle. Hence, use of aluminum or magnesium wheels can reduce the weight up to 20 per cent (as compared with traditional stamped iron wheels).
Another method is using composites in fenders reduces the weight up to 25 per cent. Aluminum engine blocks is a new trend which provides a weight reduction up to 40 to 50 per cent as compared with traditional cast iron blocks. Other applications such as doors, hood, trunk lid, seat frames, etc can also contribute in overall vehicle weight reduction. However, all these lightweight materials (Al, Mg, and Zn) are very expensive as compared with traditional steel or HSS; hence, the penetration of these materials in automotive industry would take few more years, observes Amanji.
The global automotive industry is witnessing a paradigm shift from the conventional combustion engine to sustainable mobility solutions. This iconic change is inevitable.
- Vikram Pawah, President, BMW Group India
SUVs are usually known for AWD drive; however, this feature is optional or rare in mini, sub-compact, and compact SUVs these days. These SUVs are usually front wheel drive, and owing to the fuel efficiency reasons the AWD feature is optional. This trend is usually observed in developing countries.
- Amey Amanaji, Assistant Manager, (Automotive and Transportation – Research & Consulting), Markets