Global auto companies switching off hatchback engine in India

Nissan pulled the plug on its hatchback – Datsun – last month. The final batch of the globally successful Volkswagen Polo has been produced. Next year, the Honda Jazz will also go out of the market.

The appetite for hatchbacks is now largely restricted to the top three players – Maruti

, Hyundai Motor India and – as other automakers turn their attention to utility vehicles.

The small car hub for global markets has clearly lost its charm for some automotive players.

As sport utility vehicles (SUVs) muscle in, sales of hatchbacks, or small cars, are dwindling.

In fact, sales of SUVs overtook hatchbacks as the largest segment in India in the previous fiscal year(FY22).

“Hatchbacks are going out of fashion,” said Thomas Schaeffer, the global chief executive of Skoda Auto. For a car maker that recently invested one billion euros and is lining up more for India, the prospects of the two-box car in the local market seems modest compared with SUVs. “There are certain areas of the world (where) certain shapes have disappeared, so it does not make sense to reinvest,” Schaeffer said.

This is a view echoed by many global auto conglomerates about India. After Nissan relaunched Datsun in January 2014 for India, the brand eventually made its way into Indonesia, Russia and South Africa. Tailored to meet entry-level buyers across markets, the brand could, however, barely make a mark. The company produced about 470,000 units of the Datsun in its new avatar over the last seven years worldwide. The model made up for 2% of its total sales globally in 2016.

However, falling sales amid a major reshuffle at the top led to Nissan discontinuing the brand across markets in the last two years.

Restrictions on Length

A spokesperson for Nissan confirmed to ET that Datsun is not being produced as part of its global transformation strategy wherein the Japanese car maker is focusing on core models and segments that benefit customers and dealers the most. “We can reassure all existing and future Datsun owners that customer satisfaction remains our priority, and we will continue to provide the highest levels of after sales service, parts availability and warranty support from our national dealership network.”

The number of models in the hatchback segment has come down to about 19 at the end of FY22 from about 31 at the end of FY17.

Maruti Suzuki dominates the space and has, in fact, grown its share to over 60% in the small car space. This means there is a smaller playing field for others to participate and harder to make money.

Low volumes, both in India and global markets, and restrictions on length – sub-4 metre cars – have ensured that small cars made in India are less viable for global markets. Over time, many small cars from the likes of Honda, Nissan and Toyota have been discontinued.

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