We all are aware about the rising automotive trend of customers preferring SUV’s over sedans. If you live in India, especially in a Tier I or Tier II city, chances are either one or more of your family members or neighbors own an SUV, or you own one yourself!
As per the stats below, in 2015, less than 0.4 million SUVs were sold in India, and this number rose to 1.6 million in 2022. Compared to this, 1.4 million hatchbacks were sold in 2015, and that number declined to 1.3 million in 2022. While SUVs were 22% of the total cars sold in 2015, over 60% of passenger cars sold today are SUV’s. This is not just a country phenomenon, it’s a global trend.
Being a marketer and a business consultant, I have always been curious about consumer psychology and their changing behavior. So today, let’s look at the reason and psychology behind this particular trend.
Well, most reports state that SUV’s are a rising trend, but you are unlikely to find any report that states the true reason behind it, as it’s kind of absurd to put it down in words (as many reasons in marketing are!). Before I give you my rationale, let me take you through the bicycle industry 20 years ago, as something similar happened there too.
Just like the automotive industry, bicycles can be categorized in different types of segments.
- Road bikes, which are sleek and light, are very similar to sports cars; they are meant to go fast on smooth tarmac roads.
- Hybrid or city bikes, which are like the crossover cars, and are ideally meant for the city; however they tackle bad city roads also or occasionally unpaved roads.
- Mountain terrain bikes (MTB’s), as the name suggests are made for mountains or off roads. Very much like the SUV’s they look bulky, are bigger in size, and have a seating position that is much more upright as compared to Road and Hybrid bikes.
Back in the early 70’s and 80’s, the cycling industry was dominated by road bikes. Events like Tour de France were very popular and their popularity was growing rapidly till the 2000’s. However the consumer buying trend was different, road cycling although very popular, the new cycling enthusiasts preferred mountain bikes over hybrid or road bikes.
An ideal cycling consumer behavior went like this:
- First purchased a mountain bike to start with, which they rode mostly inside the city and on paved roads.
- In a few months or years they realized that mountain bikes were not very efficient as compared to city and road bikes, since MTB’s had knobby tires and heavy frames. The quick solution to this was to change tires to smoother treads or slicks, so as to make them quick on smoother roads.
- Once the cyclists started getting serious about cycling and became more competitive, they had a need for a more efficient bike to suit the urban terrain, thus the need for city bikes.
- Once you are hooked to cycling, cyclist’s feel the need for multiple bikes for every terrain. Road cycling is still epitome of urban cycling enthusiast. With the various cycling apps that track your performance and share it on social media, it’s road bikes where every cycling consumer supposedly completes their purchasing cycle. But don’t worry, bicycles have more subcategories than any automotive enthusiast can imagine.
In the cycling industry, it’s understandable why such a trend exists. The first time customer wants an MTB, and there are various reason to justify this purchase cycle
- MTBs are often cheaper compared to city and road bikes.
- MTBs look sturdier compared to city and road bikes.
- MTBs are much cooler looking because of their chunky tyres, frame design and shock absorbers. These aesthetics are missing in city and road bikes.
- Last but not the least, the aspirational factor. Cyclists actually imagine themselves taking their bike to mountains – someday, or often.
It’s only when cyclists start understanding the functionality of bikes (aka actually using them), they look for more practical solutions as now their own physical effort and performance numbers for social media are at stake.
The case of rising demand for SUVs or SUV looking cars may be somewhat similar, yet somewhat different in India. So let’s look at the similarities and differences between SUVs and MTBs.
Similarities between SUVs and MTBs
- SUVs look chunkier and are heavier, thus seem to have good road presence like MTBs and convey a sense of security (however contrary to the truth this may be).
- They are mostly driven in cities, despite Indian roads having improved significantly in the last 10 – 15 years. Both however seem to handle bad roads with ease.
- Their ride quality is poor compared to regular cars like sedans or hatchbacks, as they have higher center of gravity because of higher ground clearance.
- SUVs seating position is higher like MTB’s, however this is an important point that I shall discuss later.
- Like MTB’s, SUVs are not efficient and are slower compared to other cars, however this may be a small price to pay.
Differences between SUVs and MTB’s
- MTB’s are cheaper but SUV’s are more expensive than their counterparts.
Opting for SUV’s in US is an Economic rather than Trend-Related Issue
In the United States, SUVs and pickup trucks are considered essential vehicles, and thus have exploited the “SUV tax loophole”. The rise of SUVs was majorly a trend because big SUVs were characterized as light pickup trucks, which provided economically beneficial during depreciation and excluding them from the gas guzzler excise tax.
However, in India, SUVs are more expensive than other cars, as they attract the highest cess and VAT compared to any other cars in their category, yet they are being preferred.
This is a really important point to consider. Remember I mentioned earlier that first-time bike enthusiasts prefer to purchase MTBs or mountain bikes not just because they look sturdier but are also cheaper. However, if SUVs are actually more expensive than hatchbacks, and everyone knows Indians want value for money, then why are more and more people buying them? Surely, they look sturdier, but they aren’t safer compared to a sedan.
You can argue that SUVs are very spacious, however I beg to differ, as they dont have any significant luggage storage advantage even when compared to a small hatchback.
Moreover, sedans offer better performance and smoother rides than SUVs especially on Indian roads, full of potholes. So the price, ride quality, efficiency and practicality (with respect to terrain) all go against an SUV. So the question remains – why would the Indian public prefer a less smooth ride for more money? It’s counter-intuitive.
Let’s now get into my theory!
So Why Are People Opting for SUVs Despite Their Major Pitfalls
As discussed above, things which go in the favor of SUVs are primarily looks as they are perceived to be full sized cars compared to hatchbacks. I believe the major reason is their higher seating position. This alone can make you feel 10 feet taller and 10x richer. Let’s try to understand this deeper.
Understanding the Effects of Social Media on SUVs
One might easily dismiss social media as the cause of buying SUVs at first but we as society have become much more polarized. Over the last 10 years India progressed not just economically but also improved in global image that has increased self confidence of Indians, especially the affluent Indians. Yes, it would be safe to assume India has become much more right winged over the last 10 years. This has made us proud and a bit egoist as well.
Today an SUV in my personal opinion satisfies our ego with its high seating position and the on-road presence they provide. The joy of looking down on smaller cars and comfortably ignoring them is something which every Indian loves, and thus despite narrow roads and limited off-road driving, SUVs are more of an emotional choice than a practical one for Indians.
So what do you think? Do you agree with my analysis? Let me know in the comments below!
Abhishek Sareen is a marketing professional with over 16 years of experience. He started his career as a management consultant and currently works in international business. He has set up businesses like Track & Trail, BrooksBicycles.com and created consumer brands like Montra, Machcity and Roadeo. He’s is a passionate cyclist and participated in several endurance competitive events like MTB Himalaya. His interests are in behavioral psychology, economics and chess. He is a graduate in Computer Science and an MBA in Marketing. He completed his executive education from IIM-A in 2016 focusing on business strategy.