SUVs are destroying Indian sedan sales, but not for luxury carmakers

Executives at luxury carmakers such as BMW India, Mercedes and Audi India told Mint that sedans remained a key pillar of growth, making up more than 40% of sales, albeit down from around 50% a few years ago.

Meanwhile, the share of sedans has fallen below 10% of India’s total car sales of 4.3 million in FY25, according to data from the Society of Indian Automobile Manufacturers (SIAM). The data showed the share of sedans in overall car sales have been in steep decline since FY19, when they accounted for 19% of the total, while SUVs and MPVs comprised 29%. By FY25, the share of sedans fell to around 9% while the share of SUVs and multi-purpose vehicles (MPVs) shot up to 65%.

In FY25, SUVs and MPVs saw sales surge by 11% to 2.79 million while passenger cars, which include sedans and hatchbacks, saw sales fall by 13% to 1.35 million, according to SIAM data.

Mass-market sedans such as Honda City, Hyundai Verna and Maruti Ciaz were hit hardest. According to SIAM, Honda City saw sales fall 35% to 10,901 units, Hyundai Verna saw sales decline 48% to 15,593 units, and Ciaz saw sales tumble 19% to 8,402.

Expensive tastes

However, the story in the luxury car market was entirely different.

Sedans accounted for 40% of the 15,810 vehicles BMW sold in India in FY25, said Hardeep Singh Brar, president and chief executive at BMW Group India. He added that this was because high-end sedans were much more luxurious and comfortable than most SUVs.

“Sedans, being lower in terms of seating position, etc., are much better in terms of overall comfort. They give more of a feeling of luxury than SUVs. And most luxury sedans are actually chauffeur-driven," he said.

Top executives at other luxury automakers agreed that these were the factors keeping luxury sedans alive in India.

Balbir Singh Dhillon, head of Audi India, said, “[We are] keeping in mind that still we have a large percentage of our customers who are chauffeur-driven and sit in the back, for whom sedans are the preferred choice."

“That demand still is strong for us and we have two very strong models that we are selling at this point in time–Audi A5 and Audi A6," he said, adding that 40% of Audi’s India sales still come from sedans.

Mercedes, the largest luxury carmaker in India, is also bullish on sedans. Its best-selling car in India, the E Class LWB, is a sedan. Mercedes India managing director Santosh Iyer told Mint that ride height and comfort ensure its full-size cars continue to do well in India. While the company did not reveal exact numbers, it said in a statement the E Class LWB saw sales grow 47% year-on-year in the September quarter.

Harshvardhan Sharma, group head for auto tech and innovation at Nomura Research Institute Consulting & Solutions India, said, “While mass-market sedans have lost relevance to SUVs, the luxury segment operates on a very different value equation. For affluent buyers, especially in India, the ‘job-to-be-done’ is rear-seat comfort, quietness, and long-range ride quality, which sedans inherently deliver better than SUVs. That’s why the Mercedes E-Class LWB remains India’s best-selling luxury model and BMW’s new 5 Series LWB crossed 1,000 units within months of its launch."

Mass-market carmakers pivot to SUVs

Meanwhile, mass-market carmakers have seen their SUV models dominate in recent years. The share of SUV's in Hyundai's sales has risen from 24% in FY19 to 69% in FY25, in Maruti's from 14% to 28%, and in Tata Motors' from 34% to 75%.

None of the top carmakers have unveiled plans recently to launch a new sedan in India, with most focused on the SUV segment. For some, SUVs have edged out even blockbuster sedans of the past. Honda, which previously saw runaway success from its City sedan, is now focusing on these larger vehicles.

According to plans unveiled to investors on 15 October, Hyundai's first investor day in India, SUVs will comprise more than 80% share in its portfolio in the coming years, up from 69% as of FY25.

India’s largest car seller Maruti Suzuki has also repeatedly said over the past few months that its vehicle development efforts will focus on SUVs. “Since SUVs are about 55% of the market today, obviously they will find a good share in our new model lineup in the next few years," Rahul Bharti, senior executive officer, corporate affairs at Maruti Suzuki Ltd, said during an earnings call on 31 July.

And Mahindra & Mahindra, India’s fourth-largest car maker, has committed to an all-SUV lineup.