Compact SUVs gaining market share as sedans sales decline


Car buyers are gradually gravitating towards sports utility vehicles (SUVs) in Nepal, following a similar trend in the global market. In just three years, SUVs have managed to gain nearly half of the market share.

According to domestic automobile dealers, hatchback vehicles used to be king in Nepal, holding the lion’s share of the market at nearly 85 percent. But customer trends have been shifting, with SUVs now the preferred choice for many customers and command 50 percent of the market with hatchbacks at 40 percent.

The biggest loser? Sedans.

Sales of sedans are almost non-existent as a hatchback offers more features such bigger cargo space and stylish looks compared to a sedan. Globally, the trend has been shifting towards SUVs compared to other passenger vehicle segments. SUVs are known for its powerful engine, sporty features, and trendy looks.

The demand for compact SUVs is especially high in Nepal compared to typical big sized SUVs, said Awashis Ojha, head of marketing and communication at Hyundai Nepal.

Customers are looking at mainly three things while buying a vehicle — brand and premium, safety and security along with the infotainment system, said Ramesh Danekhu, assistant manager, corporate communications and marketing at MAW Enterprises. Due to the high ground clearance and off-road features, SUVs are considered suitable to tackle the geographical terrain of Nepal.

Although the trend is shifting towards SUVs, first time car buyers are opting to buy hatchbacks instead before upgrading to a SUV in the future, said automobile dealers.

Hatchbacks represent almost 40 percent of the overall passenger vehicle market, said Bibek Balami, sales and marketing manager at United Traders Syndicate (UTS), the sole distributor of Toyota four-wheelers in Nepal. The hatchback vehicle segment is growing by 10-15 percent annually, he said.

Hatchbacks have been gaining popularity among Nepali customers due to its practicality. The major reasons for the immense attraction towards hatchbacks are due to affordability and easy driving said automobile dealers.

Balami said that hatchback vehicles have become the preferred car choice for middle-income people. Most people in the 18-25 age bracket opt for an affordable hatchback due to their middle-income status, said Balami. It is also the primary choice for many first-time buyers thinking of owning a vehicle, he said.

Available from 1,000cc to 1,800cc, hatchbacks deliver good mileage, said Balami. To address the competition, hatchback vehicles have started incorporating premium features such as air-bags while also upping the design quotient to look trendy.

According to import data from the Trade and Export Promotion Centre, the country imported car, SUV and van worth Rs17.85 billion in the fiscal year 2017-18 against the import of Rs15.20 billion in the previous fiscal year 2016-17. The country imported passenger vehicles totalling Rs6.37 billion in the first four months of the current fiscal year 2018-19.

Similarly, the Department of Transportation Management registered 14,452 car, jeep, and vans in the fiscal year 2017-18 just in the Bagmati zone while the country wide total reached 24,338.

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