Three-row, eight-seater vehicles are a dying breed. Once led by the iconic Qualis and later by Innova, sales in the so-called multi-utility vehicle (MUV) or multi-purpose vehicle (MPV) segment fell 38% in the year ended 31 March to 1.66 lakh units.

During the year, sales of Toyota Kirloskar Motor Pvt. Ltd’s Innova fell for the first time to 55,242 units, down 12% over the year-ago period. Some other, slightly newer models fared even worse.

Sales of Honda Cars India Ltd’s Mobilio declined 74% to 8,063 units, from 30,584 units the previous year. General Motors India Pvt. Ltd’s Enjoy declined 43% and its Tavera sales declined 22%. Mahindra & Mahindra Ltd’s Xylo declined 14% while Maruti Suzuki India Ltd’s Ertiga dipped 3%.

The decline of the segment is attributed to several factors. The Supreme Court decision to block the sale of diesel vehicles with engine capacity of 2,000cc and above in the National Capital Region (NCR) centred around Delhi made potential buyers uncertain, since diesel is the fuel of choice in this segment.

Other factors include the onslaught of compact sports utility vehicles (SUVs), the fast-emerging concept of a shared economy and the low aspirational value of utility vehicles.

Tuesday’s apex court decision to allow diesel cabs with all India tourist permits to ply in NCR until the expiry of these permits will also dent prospects of vehicles in the segment.

As a result, Hyundai has postponed the launch of its unnamed MPV for an indefinite period. The company was due to introduce a product in this segment in September-October 2016.

“We need to gather more customer insight in the segment," said Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai Motor India Ltd. He would not confirm if Hyundai has put plans for such a vehicle on hold.

“A couple of years back, both segments looked attractive but now, we understand that customers will prefer SUVs over MPVs due to varied road challenges across India," he said, adding that India’s geography poses varied road challenges, which an SUV tackles better than an MPV.

“Secondly, MPVs are also low on aspirational value," he added. “Also, MPVs are largely an urban phenomenon."

Uncertainty around diesel vehicles is the single-biggest factor for the decline, according to Anil Sharma, principal analyst at IHS Automotive, a sector-specific consulting and forecasting firm.

“That is one of the reasons but that alone is significant enough," Sharma said. “In this segment, diesel is a fuel of choice."

The Supreme Court decision was aimed at improving air quality in the national capital, which the World Health Organization in 2014 ranked as the world’s most polluted city.

According to Jnaneswar Sen, senior vice-president (sales and marketing), Honda Cars India, the MPV segment has declined “sharply".

“When we planned the Mobilio, we knew it will have a lot of commercial usage and we were not strong in the commercial segment but even that segment is declining quite sharply; so, we are also impacted because of that," Sen said.

Decline of the MPV segment could also be due to the impact of cab hailing services such as Ola and Uber, which are signing up smaller vehicles as taxis, according to Abdul Majeed, partner and national auto practice leader at Pricewaterhouse Coopers.

“Ola and Uber are bringing in more cars to cater to the needs of people’s mobility," Majeed said.

Hypothetically, if Ola has built a fleet of 350,000 cars across India and Uber around 150,000, and as per their claims, none of their cars is older than three years, then together, they account for 9.25% of the total of 5.4 million passenger cars sold in the country in the last three years.

India’s growing fascination for two-row, five-seater, compact SUVs, which have managed to cater to the needs of larger families, is another reason for flagging MPV sales.

“Customer preferences are changing due to parking space crunch. One does not want to take out a big car in today’s congested roads. That’s why compact SUVs are gaining pace," Majeed said.

“What probably will happen now is that taxi operators who were trying to cater to the needs of the cities will now go for inter-city needs. Yet, I do not see the segment growing significantly," he added.