Riding the SUV Wave

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When the runaway musical phenomenon, Sidhu Moose Wala, released the song G Wagon, invariably, he introduced many of his fans to the iconic Mercedes G Wagon. The perception of being important, stylish, and regal, is thus honed in the minds of audiences through pop culture. The fact that an entire song can be centred on a vehicle that is priced between 2.55cr. and 4cr., is fascinating enough, highlighting the vehicle as a protagonist. The rise of SUVs can be attributed to conspicuous consumption at face value, but several factors are aiding its growth. According to the Society of Indian Automobile Manufacturers, India’s passenger vehicle sales crossed the 4-million-unit mark in the calendar year 2023, which experts believe was largely guided by rising disposable incomes, redefined age profiles, better loan options, and rising demand for new sport-utility vehicles (SUVs).

Today, Indian roads boast agile and tech-overloaded cars in all sizes and colours, taking a giant leap forward from the Ambassador and Fiat days. Some three years ago, SUVs made up hardly a quarter of the car market share in India, but today, every second car that is being sold here is an SUV. Therefore, brands are witnessing an increased demand for SUVs, especially among first and second-time car buyers. According to AutoPunditz report, SUVs made up 49% of the total market share of passenger vehicles. What is even more fascinating is that experts are pointing out that the number of new SUVs launched in 2023 exceeded the combined number of launches of other segments of passenger vehicles.

Dentsu has worked on the marketing strategies of numerous car brands across the globe. Speaking from the vast experience, Indrajeet Mookherjee, President, Dentsu Creative notes, “SUVs’ popularity can be attributed to factors extending beyond mere product features, and they have evolved into symbolic reflections of an individual’s personality. Post-COVID, we are seeing increasing participation from younger customers who are tapping into this market. Typically, in their 30s, they have disposable income and are adventure seekers and affluent buyers, signalling a growth in customer aspirations.”

Target audience definitions are finally undergoing a significant change in auto marketing, with age profiles and income categorizations being redefined. Experts are stating that new buyers are on a different prowl, choosing the aspirational road over functionality.

Vinay Pant, Head-Marketing, Tata Motors Passenger Vehicles Limited shares, “Our SUV portfolio is strong, and over the years we have observed that the average age of the consumer is reducing. Over 60% of our SUV buyers are below 35, they are experimental and love to embrace new technologies with evolving lifestyles by being bolder in their choices, whether it is for the apparel they wear, the accessories they adorn, or the cars they drive.”

Experts have noted that in addition to making direct purchases, the youth today is also taking centre stage when it comes to making purchasing decisions. Talking about the same, Brijeshchadrasinh Jadeja, Business Director, Virtue Worldwide, who’s a car enthusiast and has worked for brands like Audi and Chevrolet, remarks, “Youth, today, are the top-of-line influencers in their respective families when it comes to car purchase. Upon realising this, brands have started communicating to them directly.”

Brands are observing many such changes in purchasing patterns, and hence many of them are altering the marketing initiatives, target audience, and communication. One of the biggest changes in strategies is the overplay of features and design and the underplay of efficiency.

Speaking along similar lines, Kartik Smetacek, Chief Creative Officer, L&K Saatchi & Saatchi says, “From practical reasons like space and fuel efficiency, we have moved to more evolved spaces like design and performance. Even the advertising has changed to match consumer preference, with brands selling imagery rather than just metal.”

It is understood that campaigns are now created as per consumer demand and hence brands are prioritising safety, design, technology, and features involving customer personalities as the key messaging pillars for any brand campaign.

Udit Malhotra, the Head of Marketing, MG Motor India states, “We understand that today’s consumers seek more than just a mode of transportation and the rise in disposable income has caused a notable shift in consumer priorities towards convenience, affordable luxury, and safety. At MG, we focus on making technology more accessible across all our vehicles, especially in the mass premium categories.”

A couple of years back, Maruti Suzuki’s market share in the SUVs segment, despite being the market leader in the passenger vehicles segment, was somewhere around 10%. This is when the brand realised that they should come up with more offerings in this segment. With the launch of Grand Vitara, Fronx and Jimny, the brand saw its market share in this category almost double to 20% in 2023.

In addition to launching these new cars, the car giant also took a step back and evaluated its communications. It realised the need to imbibe the design language of the product itself in its communications.

Addressing the alterations made in marketing strategies, Shashank Srivastava, Senior Executive Director, Maruti Suzuki mentions, “Earlier, with the old Brezza, we targeted urban consumers, with our message being – people who are sharp and urban tend to use Brezza. But later on, we discerned that the new breed of consumers is searching for extra features. After introducing the new set of features like a sunroof and 360-degree camera in our cars, we started focusing on the product itself and its hot features, as far as communications are concerned. Our tagline changed to ‘Hot and Techie Brezza’, and this became the positioning.”

Brands have started showing off edgy designs, vibrant colours and experiences that resonate with younger audiences. To woo the younger generations, car makers are now heavily investing in collaborations, events, community building and social media which resonate with the group.

Taking into account the pulse of the time, Krishna Iyer, Director – Marketing at MullenLowe Lintas Group notes, “Cars are now being positioned at grand sporting events like the World Cup and IPL. Furthermore, collaborations with influencers are creating interest and allure via social media campaigns.”

Prosperity and Aspirations
Notably, the prosperity indices of the middle class and rich Indians have evolved. Brand experts observe that people who are at the top of the Top of the pyramid and people who are in the Middle of the pyramid have access to money in recent times.

Harish Bijoor, Brand Guru and Founder, Harish Bijoor Consults Inc. says, “Today, luxury is nudging down income categories as never before. In terms of sheer annual income that goes into a luxury buy of an SUV, the number of years of income that goes into a buy is down to the lowest level ever.”

There’s an overall sense of buoyancy and optimism in the Indian consumer, which is being seen across categories. Industry estimates reveal that around 47,000 luxury vehicles were sold in the country in 2023, an increase of 21% from the year before. The growth of this segment is being driven by factors like the increasing number of ultra-high-net-worth individuals (HNIs) in India and the general sense of prosperity.

Noticing the trends, Jadeja states, “The mindset of consumers has changed in today’s time, and they desire to be noticed and feel unique. They look at vehicles and brands as an extension of their personality.” Experts are also noticing the emergence of the You Only Live Once (YOLO) factor in the purchasing mindsets of consumers. Krishna Iyer brings to our attention that post-pandemic, there has been a considerable shift in spending, with 35% of luxury car buyers citing YOLO as a motivator.

The younger generations are also making a mega appearance in this segment. Some youth want to be seen racing the fanciest, most feature-packed car that is strong as well as speedy. While others want to take forward the mission of sustainability, therefore embracing EVs and hybrids.

Indrajeet Mookherjee reveals that there has been a significant upswing in the demand for eco-friendly luxury cars among the younger generation of aspirational buyers, resulting in a remarkable year-on-year growth exceeding 50%.

Considering these trends, brands are trying to align their positioning and focus on the larger structure. While some of the big names like MG Motor and Volkswagen have always walked on this road of premiums, car giants like Honda are new to the bandwagon. Volkswagen has always positioned itself as a premium brand, and with the changes in purchasing patterns of Indians, it is said to be benefiting heavily. The car giant revealed that in 2023, their sales performance showed robust growth, with a nearly 8 % increase in customer deliveries compared to the year before.

Speaking about their premium positioning, Ashish Gupta, Brand Director, Volkswagen Passenger Cars India remarks, “Our customers have a strong affinity towards the German-engineered, high-quality mobility solutions that we offer. In India as well, discerning customers know and understand the superior value offered by ‘Volkswagen’ which is highly popular among urban car buyers. However, now with a significant shift towards SUVs and the demographics of the Indian consumer evolving towards a younger audience, we are adapting our brand positioning of ‘being an aspirational and accessible premium brand in India’ and making it more relevant and connected to our customers.”

On the other hand, Tata Motors is doing something completely different. Vinay Pant highlights that they don’t change their strategy as per luxury or premium vehicle segment shifts; they use different marketing mixes for different brands. Their strategy is dependent on evolving customer trends, product life cycles, target markets and brand positioning.

Sharing his insights, Kulvinder Ahluwalia, CEO, FCB Ulka voices, “The SUV and premium car category is witnessing an inflexion point in the country today. The customer of these vehicles today is more discerning and seeks the very latest from his vehicle. Going forward, with the increasing convergence of the global and Indian markets, sharper and more targeted communication, especially with digital, customers will only desire more, and they will be willing to pay when they see something fit their aspirations.”

Despite of the weak demand at the lower end of the market, Hyundai, Tata Motors, Mahindra & Mahindra, and Toyota hit new highs as they recorded their highest sales. Industry professionals envisage that high-end will continue to widen its clout as there is tremendous action here. The roads are more glamorous than before, and with functionalities losing the X-factor, brand irrationals such as legacy, brand name, origin country, and even colour will continue to fuel the growth in car sales.

Rural Fire
It must also be noted that rural India came ahead to further add fuel to the explosion of car sales. Maruti Suzuki, Hyundai Motor, Tata Motors, and Renault India posted their highest-ever share of sales from rural markets in 2023. On top of it, it was also found that Maruti Suzuki’s growth in the rural market outpaced its growth in the urban space. Therefore, brands are actively contemplating the roads that they should take, as far as communication is concerned.

The growth in rural India is said to be propelled by various factors, such as improved road infrastructure, higher minimum support price for crops, and stronger consumer attitudes in favour of purchasing. All these factors coupled with a decent monsoon have put more money in the pockets of consumers, exacerbating the car sales in the region.

“Maruti Suzuki will continue to walk on its communication path, showcasing technology and specifications, rather than resorting to pure imagery. As far as media platforms are concerned, our target group is heavily consuming content on Digital platforms. Almost 30% of our spending finds its way to Digital, and it is expected to accelerate further, with an increasing number of young buyers, and a strong Digital user base,” says Srivastava.

It is being argued that even though rural consumers are quite exposed to the urban culture, one cannot negate the need for a rural marketing strategy. Speaking about the same, Jadeja argues, “A large number of sales volumes is coming from rural areas. Rural audiences are quick decision makers when it comes to purchase of vehicles as compared to their urban counterparts.”

The urban and rural gap is ostensibly getting closer, but vehicle penetration in India remains the lowest amongst the major car markets of the world. India has surpassed Japan to become the third-biggest auto market in the world, however, experts find that India’s car penetration per 1,000 people remains relatively low at around 24, which is not only lower than the US and China’s, but also Sri Lanka’s.

Focus
Brands have altered their communications, just like their range and positioning. Now, they have been tasked with prioritising the cars that they showcase in their respective commercials considering the dominance of SUVs over the previous leader- the hatchback.

Vinay Pant explains, “Our marketing strategy goes beyond showcasing only the highest-selling models. We strive to create opportunities for our entire product range, ensuring each brand receives the right visibility. However, given the current customer preferences and the notable success observed in our SUV segment, a significant portion of our marketing budget is allocated to promoting our SUV range.”

No matter how successful the hero product is, industry experts believe that it is integral to throw light on other offerings as well. MG Motors is widely known for MG Hector in India, but the brand cannot just showcase it in the marketing campaigns.

Taking the argument further, Udit Malhotra says, “The MG brand has become synonymous with the MG Hector, which has played a pivotal role in establishing our presence in the market. While Hector has been a standout model that has garnered significant attention and sales, our marketing strategy extends beyond highlighting individual models. It showcases the overall brand ethos, innovation, and the comprehensive lineup of vehicles catering to various consumer preferences.”

“As Volkswagen already commands a presence in the premium category, there’s no significant impact on our marketing initiatives. However, as a brand we do need to identify the right mediums and platforms to engage with our customers,” says Ashish Gupta, while mentioning his marketing initiatives.

In the current times, the influence of brand ambassadors is also said to be on the rise, and professionals argue that this trend is no exception to the auto industry. Electing the right brand ambassador has become a critical component of the brand transformation journey because they not only add face value to the brand but also create a relatable and aspirational image of the brand.

Taking this thought forward, Amitek Sinha, Co-Founder and COO, ETML voices, “Brands are recognising the influence of well-known personalities in shaping public perception. Hyundai, for instance, has made a strategic move by choosing Deepika Padukone along with Shah Rukh Khan as an ambassador, leveraging their star power to connect with a broader audience and promote inclusiveness.”

Additionally, the auto sector is also witnessing the rise of women buyers, especially in urban areas. Shashank Srivastava informs us that hardly a few years back, 5% of Maruti Suzuki’s buyers were women, but the number has risen to somewhere close to 10%. Perhaps, it is the ambition of a G Wagon and a Land Rover that is pushing the case for Indian SUVs, whatever the case is, experts claim that the road ahead looks bright as SUVs leave the humble hatchbacks behind.