New Delhi, May 29 -- Tata Motors Passenger Vehicles Ltd. thinks India's hatchback slump has been badly misunderstood. Buyers, it says, didn't abandon small cars, but carmakers abandoned small-car buyers by turning hatchbacks into dull, bare-bones machines. All this, while SUVs got all the attention, technology and glamour.

Now, the maker of India's first home-grown hatchback wants to reverse that trend. After refreshing the Tiago and Altroz in quick succession, Tata Motors PV is betting that Indian buyers still want affordable small cars, provided they feel aspirational again. CEO Shailesh Chandra says hatchbacks lost appeal because the segment stopped evolving, even though millions still begin their car-buying journey there.

The strate...