With a slew of new launches, the hatchback segment has suddenly become red hot. But is the segment really big enough for them all?

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Certainly, going by the estimated figures, Maruti Suzuki holds a mind-boggling 75% share in the premium hatchback segment, while Fabia and i20 struggle to catch up with it at second and third slots respectively. But with product offerings like Toyota’s Yaris, Volkswagen Polo, et al the list of new offerings in this segment is only getting bigger by each day. So, here comes the million dollar question – Does the segment really have the potential to make all these products a profitable proposition for their respective automakers? Is the segment big enough to accommodate them all?

The premium A2 segment was opened up when the automakers saw a gap between the hatchbacks and the sedans. And all thanks to the decent growth witnessed by young professionals during the past few years, the Indian market perfectly suited the bill. Moreover, be it the sporty Swift or the elegant Fabia, all of them surely infused a fresh excitement in the Indian automotive industry. Result: Maruti Suzuki sold a mind-blowing 1.1 lakh units of Swift in the country during the last fiscal. In fact, this premium hatchback segment helped Maruti to stay afloat even during the October-December period last year, when almost all the automakers were witnessing a dip in sales. Even experts consider this segment to grow at a pace much faster than the other automobile segment in the country. But then, how long will this scenario continue?

No doubt, the competition in this segment will only get intense by each day as and when new premium hatchbacks enter the market (particularly by the end of the current fiscal), but there is no denying that the segment still has a lot of potential and will only see growth in the coming years. “The premium hatchback segment is still awaiting a lot of action and the automotive giants are acting too positive on the growth prospects of this segment in the Indian automotive industry,” agrees auto expert Tutu Dhawan. However, there are many who claim that the segment will surely see an impressive growth for the next 1-2 years, but after that, like any other product, this segment will also witness a gradual plunge.


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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
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