Kotak Institutional Equities data shows mid-size SUVs gaining share fastest as compact SUVs lose ground in India's passenger vehicle market.
Car buyers across India are increasingly choosing mid-size SUVs over compact SUVs, hatchbacks and sedans, according to a Times of India report published on August 22, 2026, that cites estimates from Kotak Institutional Equities. Mid-size SUVs, defined as crossovers above four metres in length, accounted for 18.2% of domestic passenger vehicle sales in the first quarter of FY27, up from 15% a year earlier and 12.4% two years before that. The trend marks a distinct shift within India's SUV-dominated car market, where compact SUVs had previously driven the broader move away from hatchbacks and sedans.
The report frames this as a continuation of India's ongoing embrace of SUVs, but with buyers now moving up the price ladder toward larger, more feature-rich models. The shift has unfolded over the past two years and has gained pace faster than in most other vehicle segments, according to the data cited in the report.
Compact SUVs Lose Ground As Mid-Size Models Gain
While mid-size SUVs have climbed in market share, compact SUVs, those under four metres, have seen their share moderate. Compact SUV share fell to 14.6% of passenger vehicle sales in Q1 FY27, down from 16.2% a year earlier and 15.3% two years earlier, according to the Kotak data referenced in the report.
Separate analysis from Autocar Professional corroborates this pattern, showing that within the broader utility vehicle category, the compact SUV share of overall UV sales has dropped from around 53% in Q1 FY22 to about 46% in Q1 FY27. Compact SUVs still posted a record 397,609 units sold in Q1 FY2027, with Tata Motors commanding a 29% share of that segment, but the category's relative weight within the SUV universe continues to shrink as buyers gravitate toward larger models.
Hatchbacks and sedans have also continued to lose ground. Industry data for FY26 shows hatchback sales fell by roughly 3% year-on-year, with hatchback market share slipping from 23.50% in FY25 to 20.99% in FY26. Sedans have held a comparatively small share of the market, around 8-9%, with modest growth relative to SUVs of all sizes.
Premiumisation Driving The Move Upmarket
Poonam Upadhyay, director at Crisil Ratings, is quoted in the report interpreting the shift as part of a broader premiumisation trend in India's passenger vehicle market. She said consumers are increasingly opting for higher-value vehicles that offer greater versatility and comfort.
According to Upadhyay, mid-size SUVs provide more cabin and luggage space compared with smaller SUVs, making them better suited for family use and long-distance travel. As household incomes rise and vehicle ownership cycles mature, she said, more buyers are willing to pay a premium for these benefits. She also pointed to connected car technology, advanced safety systems and convenience features as factors strengthening the appeal of mid-size SUVs.
These features, once reserved for premium trims, have become increasingly common across mid-size SUV lineups, narrowing the gap between affordability and aspiration for many urban and semi-urban buyers looking to upgrade from hatchbacks or compact SUVs.
SUVs Now Dominate Overall Passenger Vehicle Sales
The shift toward mid-size models is unfolding against the backdrop of SUVs' overall dominance of India's car market. Industry data shows SUVs accounted for 56.72% of total passenger vehicle sales in FY26, up from 54.61% in FY25, with India recording sales of more than 26.3 lakh SUV units during the year.
That overall SUV dominance has been building for years. A 2022 Times of India report had already noted India's intensifying "romance with SUVs," driven at the time largely by entry-level and mid-size models, with automakers having launched 36 SUV models over the preceding five years. The latest data suggests that romance has now matured into a more specific preference for larger SUV formats over compact ones.
Automakers Respond With Wider Mid-Size Portfolios
The report notes a clear supply-side response to this demand shift, with automakers steadily expanding their mid-size SUV lineups through new launches and facelifts. Hyundai Motor India has emerged as a dominant player in this segment, commanding close to 38% market share of mid-size SUVs according to an industry report referenced alongside the Times of India coverage.
Other established players in the mid-size SUV space include the Hyundai Creta, Kia Seltos, Maruti Grand Vitara, Toyota Urban Cruiser Hyryder, Volkswagen Taigun and Skoda Kushaq, among others. Separate sales data for the first half of 2026 shows the Hyundai Creta leading the segment, averaging over 15,000 units sold per month and accounting for roughly 23.5% of combined sales among the top eight models tracked.
With manufacturers continuing to prioritise mid-size SUV development and buyers showing sustained appetite for larger, feature-laden vehicles, the segment's share of India's passenger vehicle market appears positioned to keep expanding, even as compact SUVs, hatchbacks and sedans continue to cede ground.
