Daybreak - SUVs are taking over India — one accident, one parking spot at a time

Episode Date: March 11, 2025

After years of being associated with powerful politicians and menacing goons thanks to Bollywood films, SUVs are now undergoing a makeover. At car dealerships across the country, they are now being positioned as the ultimate family car —  a fortress that can keep your loved ones safe on treacherous Indian roads. The word on the street, according to multiple sales executives and industry insiders, is that Indian carmakers are deliberately positioning these  vehicles as rolling citadels. And it's working. SUVs are now outshining hatchbacks in annual sales. But this love for SUVs among buyers is like the inexplicable craze around skinny jeans—no one likes them except the manufacturers and the ones in them. Simply put, more SUVs on the road mean more worry for everyone else.Tune in. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.The Ken is hosting its first live subscriber event! Join two long-term and contrarian CEOs, Nithin Kamath of Zerodha and Deepak Shenoy of Capitalmind, as they discuss the mental models, decision making frameworks, and potential outcomes related to a very real possibility: an extended stock market winter that lasts 24 months or more. Click here to buy your tickets. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Up in the 90s or the 2000s or before that,

you most certainly would know the Omni. The most popular use case for the iconic Maruti van was to ferry kids to and from school. But over the years, the car that somewhat resembled a breadbox earned a rather unfortunate reputation thanks to Bollywood films back in the day. It came to be known as the OG kidnapper van. Well into the 2000s, the moustachioed goons and gundas and classic Bollywood action films upgraded their wheels.

They weren't zipping around chasing their enemies and omnis anymore. Instead, they were driving big, imposing SUV. The kind that resembled full-blown army tanks, and that led to the omnification of SUVs, where they also developed somewhat of a reputation. We would all assume that they were reserved for politicians, actors, and, well, goons, and nothing in between. For decades, that was reflected in sales as well.

The Ken reporter Rona Kumar Gunjan studied 25 years of data from the Society of Indian Automobile Manufacturers, and he found that between two years, In 2000 and 2010, there were only two SUVs that regularly made it to the top 10 list of best passenger vehicles. Mahindra Bolero and Mahindra Scorpio. And these were both used almost exclusively by travel agencies in rural belts. The rest of the list was dominated by hatchbacks and sedans, which for the longest time were widely perceived as the ultimate family cars.

But turns out something has changed. Ronek visited dealerships of nearly every major carmaker and noticed a rapidly growing trend. SUVs have undergone a bit of a rebranding exercise. They are now being sold as the ultimate family car. You see, they're positioning it as not just a car that can take you from point A to point B, but a fortress that can keep your family safe on treacherous Indian roads. So if you walk into a car dealership today and express an interest in purchasing an SUV,

you'll likely hear a sales executive harp on about a solid build quality and about it being muscular, imposing and aggressive. The word on the street, according to multiple sales executives and industry insiders, is that Indian carmakers are deliberately positioning their vehicles as rolling citadles. And it is working. They've managed to do something that hasn't been done before here in India. SUVs are now outshining hatchbacks in annual sales. And the number of SUVs that are making it,

to that top 10 list of cars is only getting larger. Currently, the top spot is taken by Tata Punch, a compact SUV that benefits from lower taxes because of its sub-4 metre length. We've actually spoken about why the punch succeeded in a recent episode of daybreak. But here's the thing. This love for SUVs among buyers is kind of like the inexplicable craze around skinny jeans. No one likes them except the manufacturers and the ones in them. Simply put, more SUVs on the road mean more worry for everyone else.

Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahil Filippos and I don't chase the news cycle. Instead, every day of the week, my colleagues, Nikda and I come to you with one business story that is worth understanding and worth your time. Today is Tuesday, the 11th of March. Ronak spoke to government officials, police and urban planners and they all seem to express the same. concerns. The trend of buying more SUVs can be risky from a safety perspective. The funny

thing is, no one actually wanted to go on record about it, and all of their reasons were almost entirely the same. They all said that India's shift to larger cars reflects prosperity and higher disposable incomes after the pandemic and nobody wanted to deviate from that narrative. Even official

traffic accident reports have gone quiet. The Transport Ministry hasn't published nationwide data since assessment year. back in 2022. And an official told Roanak that this was because of delays in quote-unquote verification. But the same official did have access to provisional traffic accident data for 2024 from 15 of the 28 states, including major ones in terms of vehicle use like Bihar, Karnatica, Maharashtra and Uttar Pradesh.

The official refused to share the data with us. But they did allow us to glance through some Excel sheets on their screen. They pointed out some key correlations that, indicate a very worrying trend. Road accidents in most of these states hit an all-time high in 2024, surpassing 2015, which had been the deadliest year on record. Overspeeding remains the top cause, and rear-end collisions where one vehicle plows into the back of another

are the most frequent type of accident. The Ken reviewed the annual reports on traffic accidents from 2010 to 2022 and found out the reason for accidents and the type of accidents have mostly remained the same. But what has changed is the car fatality rate. That's the number of deaths caused by cars as a proportion of total fatal road accidents each year. Now, according to the official, the real impact of this SUV craze in terms of accidents will be far more stark after 2025. That's because historically, cars that are 2 to 4 years old cause the most road accidents.

The logic is simple. Drivers become far more comfortable and then they start speeding. Since one in every two cars sold in India in 2020 and 2024 is an SUV, these vehicles will inevitably enter the danger zone by the end of 2026. And the severity of the accident is generally much worse when it comes to SUVs. That's because of the height of the bonnet, which is the hood of the car. A doctor at the All India Institute of Medical Sciences also corroborated this. They said an SUV can cause more permanent damage or death,

even if the car is going at 20 kilometres per hour. Does that stop people from climbing behind the wheel of their dream SUVs? It doesn't seem so. Stay tuned. The Ken spoke to a dozen potential car buyers across dealerships and none of them were even considering a hatchback. Most buyers believe that a compact SUV feels like way better value for money. Like one car dealer put it,

they get the looks of a small SUV at a price that's only slightly higher than a hatchback. and they get the added security of more ground clearance. It works out well for the manufacturer because it means more profits. You see, the difference in production costs between a hatchback and a compact SUV typically ranges from about 10 to 15%, especially when built on the same platform, which means they would share many core components like chassis, suspension system and floor plan. But the retail price can be 25 to even 50% higher just because of the structure, ground clearance and other cosmetic features. Take for instance, Maruti's Baleno, which is a hatchback's and the Fronks, which is its crossover.

Or Hyundai's I-20, which is a hatchback and venue, which is its compact SUV. Or in Honda's case, the Jazz, which is a hatchback and the WRB, which is the crossover. They all share the same platform resulting in minimal production cost differences. So, it's a great deal for both manufacturers and buyers. But there is one segment of people that's not too crazy about this new trend. Real estate developers. Just take Delhi, for instance. In places like Dwarca or Gurgao, dominated by high rises and half-finished towers,

builders are struggling to provide ample parking space. We spoke to a senior executive at a Gurgao-based real estate firm who painted a pretty grim picture. They said earlier, a parking lot could typically fit 100 cars into one space. But now, with so many more SUVs entering the picture, the number has come down to 90. Now that most families have two cars, the problem is even more complicated to solve. Earlier, you could just allocate about 3.5 to 3.9 metres in length and around 1.6 meters in width per car, and most cars would fit, with a few exceptions, that could then be adjusted. But that just doesn't work anymore.

So they are all scrambling to find more parking space, which in many cases means digging deep. deeper and deeper for multi-level basements or redesigning the whole plan altogether, both of which, naturally, are extremely expensive options. It's also not just a parking crunch. These SUVs are also too heavy for Indian roads. For example, Maruti's francs weighs about 50 to 100 kgs more than the Baleno, putting added pressure on road surfaces. This extra strain speeds up road wear and tear,

leading to more frequent maintenance and repairs. A civil engineer Ronak spoke to explained that roads are usually designed to handle trucks and lorries which are much heavier than cars. But these heavy vehicles are usually restricted only on city roads helping distribute the load. You see, if the average load on roads consistently increases, the subgrade layer, which is the foundation made of local soil, begins to cave. And that causes roads to collapse or form crater-like cavities. And as if crumbling roads were not enough, there are also massive. traffic jams to consider. One official from Pune told

Ronek that the average commute time during office hours has gone up by nearly 12 minutes. So, for that satisfying door thard, that solid build and commanding seating position, Indian car buyers are making everyone else pay the price. Daybreak is produced

from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full Your subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippos and edited by Rajiv Sien.