Tata Motors to continue investing in hatchbacks despite SUV boom

Tata Motors expects the updated Tiago to help increase hatchbacks’ contribution to its passenger vehicle sales mix to 20 percent from around 15 percent currently, according to the managing director of the company’s passenger vehicles business, Shailesh Chandra. The carmaker believes the hatchback segment has stabilised after years of decline and will continue to remain an important part of the Indian passenger vehicle market.

The Tiago facelift was launched this week at Rs 4.69 lakh, with prices extending up to Rs 8.55 lakh (ex-showroom). The update brings significant exterior and interior changes, additional features and more safety equipment. Along with the recently updated Tiago EV, it gives fresh momentum to the entry-level segment, which has seen limited new product activity.

1. Tata aims to increase hatchbacks’ share in sales from 15 percent to 20 percent
2. It says hatchbacks’ share in the PV market has stabilised at around 21 percent

Tata sees long-term potential in hatchbacks

Despite the continued shift towards SUVs, Tata Motors says it sees long-term potential in the hatchback segment and will continue investing in the Tiago and Altroz. Chandra said the company has no plans to expand its hatchback portfolio but added that existing models can remain relevant through regular design, feature and technology updates.

Tata Motors believes hatchbacks will continue to appeal to first-time buyers, customers in tier-2 and tier-3 markets, women buyers and those seeking compact urban mobility.

Why Tata believes hatchbacks remain relevant

Tata Motors said its hatchback business grew 16 percent in FY26, outperforming the broader hatchback segment. The company sees this as evidence that customers continue to respond to updated products.

According to Chandra, the challenge for hatchbacks has not been a lack of customer interest but a lack of product updates compared to SUVs. “Customers did not move away from hatchbacks,” he said. “What has changed, however, is what this segment has been offering. Over time, we have seen that hatchbacks became more functional and less aspirational.”

He argued that SUVs have evolved more rapidly in terms of design, technology and features, while hatchbacks have received comparatively fewer updates. Tata believes products such as the refreshed Tiago can help address that gap.

Chandra added that hatchbacks continue to appeal to buyers looking for affordability, a compact footprint for urban use and the practicality associated with the body style.

Hatchback segment showing signs of stability

While hatchbacks have lost market share to SUVs over the last few years, Tata Motors believes the segment has now stabilised at annual volumes of over one million units. “What is coming out clearly is that this is one segment which has been most stable at about 1 million-plus. 1 million is a big size, and as the Indian market grows, it will still be able to sustain this level of share,” Chandra said.

According to Tata Motors, hatchbacks accounted for nearly 46 percent of the passenger vehicle market in FY20. That figure fell to around 23 percent in FY25, before stabilising at approximately 21 percent in FY26.

Chandra said the segment remains sizeable despite the shift towards SUVs, and he expects hatchbacks to continue contributing meaningful volumes as the overall passenger vehicle market expands.