The April-May period, most SUV players - M&M, Ford and Renault - saw a drop in sales.
Maruti Suzuki and Hyundai Motor, the country's biggest car makers, will next month launch a new product each in the sports utility vehicle segment, a space where neither is well represented.
Hyundai is set to launch the Creta on July 21 and Maruti will launch the S-Cross in mid-July.
Technically, the S-Cross is a crossover-a car with features of a sports utility vehicle (SUV)-but it is expected to be positioned against the Renault Duster, Nissan Terrano, Ford EcoSport and the Creta.
Both vehicles are likely to be priced at Rs 9-120,00,00.
The launches come as the SUV segment is turning sluggish.
In April-May, most SUV players, including Mahindra and Mahindra, Ford, and Renault, saw drops in sales. M&M, the biggest segment player, saw sales of utility vehicles drop five per cent in May.
According to the Society of Indian Automobile Manufacturers, the utility vehicles segment, which includes sports, multi and premium utility vehicles, declined over two per cent in May.
"The SUV segment has been lacking excitement for a while now. This creates a challenge in terms of repeats and upgrades from buyers."
"The Creta gives me confidence that we will grow the SUV segment and have a strong position," said Rakesh Srivastava, senior vice-president and division head, sales and marketing, at Hyundai Motor India.
Experts said rural markets contributed a significant chunk of SUV sales and there was a slowdown in demand from semi-urban and rural areas due to uncertainties over the monsoon.
Kumar Kandaswami, senior director, Deloitte, said any rural slowdown would affect sales of SUVs.
Maruti and Hyundai have experimented with premium utility vehicles.
The market did not accept Hyundai's Santa Fe priced at Rs 270,00,00 and Maruti's Grand Vitara priced at Rs 230,00,00 lakh.
Maruti's multi utility vehicle Ertiga, priced at Rs 6-870,000, has done reasonably well with over 62,000 vehicles sold in the last financial year.