Compact SUVs will secure growth for Indian OEMs

With low consumer spending power, harsh environments and tough terrain, India is broadly considered one of the most challenging markets in which an automaker can operate. For this reason, brands are looking at new ways to provide quality products but with a lower total cost of ownership. The answer appears to lie in the compact SUV segment—dubbed CUVs—and subscription models.

CUVs sit within the sub-four metre segment and benefit from slightly higher ride heights compared to a conventional hatchback, useful for poorly maintained roads that are common across India’s cities, highways and rural regions. CUVs are also well-equipped, comfortable and increasingly safe. Given their shorter wheelbase compared to a full-size SUV, a CUV is also well suited for driving in heavy traffic and parking in tight spaces. For automakers, reduced excise duty for sub-four metre vehicles—8% as opposed to 20% for vehicles over four-metres in length—brings an added financial incentive.

The number of CUVs available has expanded rapidly and many have been purpose-built for the Indian market. The segment looks