Why buying a sedan over an SUV makes more sense

SUVs, or sports utility vehicles, are going to cost more. You might have heard the finance minister's Budget speech hiking the excise duty on SUVs from 27% to 30%. As per the finance ministry classification, SUVs are defined as vehicles that have an engine capacity of over 1500cc, are over four metres in length and have a ground clearance of 170 mm. Vehicles meeting all three conditions are classified as SUVs and will have to pay an additional excise duty.

SUVs as a category have performed well in the last one year. As per SIAM (Society of Indian Automotive Manufacturers) data, car sales fell 1.8% during April 2012 to January 2013 to about 1.56 million units; while sales of SUVs surged 57% to 451,935. Given this buoyant demand for SUVs, all companies affected by the excise duty hike plan to pass it on to the consumer immediately. Tata Motors has announced an increased in prices of its Sumo, Safari and Aria models by Rs 20,000 to Rs 35,000.

Experts feel other manufacturers are likely to follow suit. However, there is a slight anomaly. "Due to the finance ministry's classification, some SUVs have escaped the excise hike. Buyers should take advantage of this," says Roshun Povaiah of cartoq.com, an automotive portal. Yes, that is true. And here is the scoop: Maruti Ertiga (Diesel) and Renault Duster (Diesel) will be spared the hike. Besides this, due to poor car sales during 2012-2013, manufacturers are doing their bid to push sales of sedans and hatchbacks.

For example, Tata Motors has announced a discount of Rs 50,000 on Manza (diesel). Tata Motors has introduced the 'Club Class Buyback Assurance', under which its customers can get 60% of the purchase price after three years. Many other sedan makers are offering discounts anywhere between Rs 30,000 and Rs 1 lakh.

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Sure, a measly price hike of 2-3% is unlikely to affect SUV sales since most of them command a waiting period ranging from one month to six months. "Many Indians purely buy an SUV for the purpose of status. Driving a large car gives them power on the road, for which there is no substitute," says Roshun Povaiah of cartoq.com. However, if that is not your sole purpose of buying a car, you could look at sedans. Experts are of the view that it may make sense to opt for a sedan if it is your first car.