Move over, small cars. Indians love their big, flashy SUVs

It’s true what they say: size does matter, especially in the passenger vehicle market.

Recent data suggests that Indians increasingly think that bigger is far, far better. For proof, look no further than the response to Mahindra and Mahindra’s sports utility vehicle (SUV), XUV 500: when the company opened bookings for the second time late last month for a limited period, it was inundated with more than 25,000 orders.

The XUV 500 is now sold out for the next four months and M&M has decided to increase the vehicle’s production to 4,000 units per month from May, up from 3,000 currently.

[caption id=“attachment_222343” align=“alignleft” width=“380” caption=“The XUV 500 is now sold out for the next four months and M&M has decided to increase the vehicle’s production to 4,000 units per month.”]  [/caption]

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It’s not an aberration. Toyota’s recently launched SUV model, Fortuner, also has a waiting list of six to eight months. SUVs from other vehicle makers, including BMW and Audi, are also facing a huge backlog of customer orders, according to a report in The Economic Times.

That’s in sharp contrast to what’s happening in the small car market, where annual demand is expected to have shrunk for the first time in a decade.

The SUV segment continues to roar ahead though. Indeed, a recent India Today report said that 15 new models are set to hit Indian roads this year.

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At least two of them will belong to Nissan-Renault, which plans to introduce its much-talked-about model Duster. Both models will be priced below Rs 10 lakh. Tata Motors is also planning to launch Tata Safari Storme, a revamped version of its Tata Safari. Mahindra and Mahindra is also planning more models.

Even the grand daddy of small cars, Maruti Suzuki, is planning to launch a mass segment concept SUV XA Alpha, which the firm unveiled at the Auto Expo last month, according to a DNA report.

“The demand for SUVs in India is on the rise. As this segment has immense growth potential, almost all automakers are trying to tap it,” Shashank Srivastava, chief general manager (marketing), Maruti Suzuki India, wass quoted as saying in the India Today report.

Driving this demand are relatively young buyers, for whom high interest rates are apparently, not as big a deal as for their counterparts in the small car market. It also helps that many SUV models are available in diesel-engine versions (diesel is much cheaper than petrol).

In 2011, the SUV market (Indian and imported) expanded by a sizzling 32 percent, even as small car buyers stayed away from the showrooms. Currently, SUVs and multi-purpose vehicles(MPVs) account for 15 percent of the total passenger car market in India. However, that figure is expected to go up to 25 percent in the next three years.

At the moment, there’s just one possible villain in this success story: a proposed levy on diesel-engine vehicles. There is some speculation that if the levy is announced in the forthcoming Budget, it could mute the growth of SUVs.

But until that happens, we love our big, flashy SUVs.