Small cars will continue to account for a significant share of sales in the local market despite growing consumer preference for more premium SUVs, a senior official at the country’s largest automaker said.

With India’s economy reviving and growing among the fastest in the world, income levels are expected to rise, supporting first-time buyers in the mass market and boosting sales of small cars going forward, Shashank SrivastavaSenior Executive Director (Marketing & Sales) at

told ET on Thursday.

“There is an inherent demand (for small cars) given our demographics. The average age of the inhabitants of our country is 25 years. As many as 65% of car buyers are younger than 35 years old. Many young people come to work every year, and they strive for personal mobility,” he said on the sidelines of the new launch Alt The K10 is priced between Rs 3.99 lakh and Rs 5.83 lakh (ex-showroom).

Half of the sales of passenger cars in the local market are made by first-time buyers.

Srivastava said entry-level sales have been under pressure recently due to higher vehicle costs amid higher taxes, commodity prices and increased regulatory requirements, besides consumers preferring more features.

“The increase in prices as a percentage of the total value of cars in this segment was greater,” he said. “And due to high price sensitivity, growth in this segment has been marginal. But there is a demand. The manufacturer needs to find the right balance, offer value and drive demand.”

Last year, 550,000 entry-level hatchbacks were sold in the country. Maruti Suzuki dominates this space with a market share of 88%. “The absolute volumes in the segment are large even compared to SUVs. The four best-selling models are still hatchbacks,” Srivastava said.

SUVs were the best-selling segment in the Indian car market last fiscal with sales of 1.23 million units compared to hatchback sales of 1.15 million.

Srivastava admitted that the Alto – once the best-selling car in the Indian market – has slipped down to fourth place in the past few years, but said that with the new Alto K10, it is expected to regain its pole position.

As much as 65% of Alto’s sales are in small towns. With the new Alto K10, Maruti Suzuki is also aiming to boost sales in major cities.

Certainly, the Alto, with sales of 150,000 units last year, was ahead of SUVs like Hyundai Crete, Maruti Suzuki Brezza and Tata Nexon by volumes.

“India is a vast country with a diverse demographic,” Maruti Suzuki Managing Director Hisashi Takeuchi said. “Just like cuisine and culture, customer demands and preferences also change from place to place… While SUVs have definitely gained in popularity recently, a large portion of customers still prefer hatchbacks… As the market leader , we have to keep the hatchback segment filled with exciting products,” he added.

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