The Indian automobile industry is set to become the sixth largest passenger vehicle producer in the world, growing 16-18 percent to sell around three million units in the course of 2011-12. The passenger vehicles sales trend has shown an exponential growth in past few years and it is expected to grow further in coming years.
The Indian market presents several challenges to car manufacturers and dealers. After researching a bit online about the current car scene in India and talking to car owners, I came up with the factors that make the Indian car market stand out from others in the world.
Traffic and Road conditions: Road and traffic conditions define the driving experience on Indian roads. Ever-growing number of vehicles on the roads, havoc caused by on-going construction and the general lack of driving discipline pose a great challenge and safety concern for the people on the roads.
Unpredictable bottlenecks on roads cause traffic jams at peak traffic hours
The metro areas are the worst hit with the highest density of vehicles and least adherence to traffic norms. All the above factors affect the movement of traffic and create traffic jams on all the major city routes. To commute comfortably from one location to another, avoiding environmental factors such as rain, dust, smoke and heat, people choose cars over two wheelers.
Way Finding: When people want to travel from one location to another and are not familiar of the route, they generally try to stop and enquire auto rickshaw drivers, pedestrians or the driver/ passengers in the adjacent car for the directions. Another common approach is to call people who have been on the same route earlier and enquire about the route. Lately checking the route on their smart phones on the go and GPS navigators (inbuilt or aftermarket fitment) are making their presence felt in the car world.
People said that they don’t fully rely on the current navigation systems. Due to fast changing road infrastructure, these systems are mostly not updated with the latest route information, which at times leads to confusion. This opens up the opportunity for better navigation systems for Indian market.
Huge numbers of first time car buyers: Due to the road and traffic conditions, the traditional “two wheelers” – bikes and motorbikes are increasingly unsafe. While the underlying need is a better and convenient mode of transport, buyers cited several reasons for their purchase, viz.
- For some it is an attempt to provide the best possible amenities to their spouse most people buy their first car right after their wedding
- Others plan to buy their first car while they are expecting a kid or after childbirth
- The first cars for few are sponsored by their parents while they were still studying
- There are a very small percentage of people who really buy their first car for leisure purpose. Younger buyers said that they love to go for long drives and hence they bought the car and used their motorbikes to commute within the city
Financial Overview: “India’s consumer market till now was broadly defined as a pyramid; a very small affluent class with an appetite for luxury and high-end goods and services at the top, a middle class at the center and a huge economically disadvantaged class at the bottom. This pyramid structure of the Indian market is slowly collapsing and being replaced by a diamond – a relatively large affluent class at the top, a huge middle class at the center and a small economically disadvantaged class at the lower end. The diamond represents increasing volume and value across all classes of Indian consumer market.”
Source: The Mckinsey Quarterly
India is the most price sensitive market in the world. The increasing income of the Indian middle class has seen a growth in sales of small cars. Owning a car is a huge status symbol for the people in India. Many people take pride in being the first in the family to own a car. Also for many it is a transition phase from a two-wheeler to a four-wheeler. Tata Nano is one of best examples to describe this sentiment very aptly portrayed in their advertising campaigns.
Tata Nano Ad. campaigns. Illustration by SriMW
Recently the petrol prices became really high forcing people to use more of public transport and offering free petrol became part of the offers for any new purchase!! With the rise in petrol price Maruti Suzuki brought back it’s ad campaign “Kitna Deti Hai” which means, “How much mileage does it give”.
“Kitna Deti Hai” Maruti Suzuki ad campaign- The film ends with a voiceover that says, "For a country obsessed with mileage, Maruti Suzuki makes India's most fuel efficient cars" - Maruti Ad Campaign
Social Influencers: There is lot of social influence from friends, family or relatives when it comes to buying a car. Buyers reach out to their social circle for recommendations regarding car models and dealerships. Some of the online platforms that are influencing people’s buying decision are www.carwale.com, www.teambhp.com, www.autocarindia.com, www.cardekho.com
Cars make a statement about the owner’s personality hence buyers are very cautious about the cars that they pick. Brands also play a vital part in projecting a brand image for e.g. Honda equals Pride, Mahindra is seen as a rugged brand and Maruti Suzuki equals good value for money whereas Mercedes signifies luxury. Brands carefully pick actors, sportspersons or celebrities as their brand ambassadors as Indian consumers, mainly youth is influenced by testimonials of celebrities.
First cars for most of the buyers are mid range hatchbacks. In most cases the buyer is the first person in the family to own a car. He takes his driving lessons from a driving school and prefers something easy to maneuver within the city with low maintenance costs and a great mileage.
People take their first driving lesson from the driving institutes
Nissan Sunny is “stretched in size” and “stuffed with features” and so it’s not just a car but a ‘car’. Check Nissan Sunny Ad. Campaign
People want to buy cars, which are superior or at par with what people in their social circle own.
Car styling was voted as one of the top 3 factors considered by individuals while buying. The vast arrays of cars seen on the road have very similar styling and provide very few color choices. Subtle styling changes make some of the cars stand out from others. For e.g. many style conscious buyers recently picked Honda Brio for the uniqueness and freshness it brings to the model. Others preferred the outgoing styling of the Maruti Suzuki Ritz and Chevrolet Beat or the overpowering looks of the Mahindra XUV. It indicates a growing appreciation for styling amongst young buyers in India who look forward to these differentiating factors even in the entry-level models.
Cultural Significance/ Unique features: Traditional values form an integral part of the Indian culture. A few of these beliefs creep into the buying process and even get displayed in the car. In a country where frugality is a virtue, people have waited for festive occasions to avail attractive discounts. As a value add service all the dealers now make arrangements for the puja of new cars right in the showroom before taking it out.
Couple posing with their car in the showroom after purchase
You can find Ganesha idol / idols of other gods as per the religious belief on the dashboard on almost every car. Sometimes even the dealers provide an idol/ picture of God as a gift.
Lord ‘Ganesha’ on a car dashboard decorated with flowers on a festive occasion
Dussehra is one of the festivals when drivers clean and decorate their vehicles with flowers and then perform puja of their vehicles.
A decorated autorickshaw. Similar decorations are done for buses and cars during festival of Dusshera. Photo Courtesy: Jon Snydal
Quite a few cars are also bought as part of dowry, which is an age-old social vice in which girls’ parents’ gift cars and other expensive items in their daughter’s wedding. The groom’s family sometimes dictates even the model of the car. This is more common in rural areas and educated people are moving away from this custom.
Purchases are also seen to peak around the New Year when older models are available in clearance at cheaper rates. However, the various milestones in life still remain an important factor viz. first job, marriage, childbirth, etc.
The sense of appeasement of safety is also drawn more from religious influences. Hardly any car in India is brought home without a ceremony at a temple. There are unholy parts of the year where purchases are deferred and car sales are seen to dip significantly.
Religious ceremony is done at a temple for the safety of car and the driver before taking the car home.
Lemon crushing ceremony signifies that we are eliminating all the evil effects around the car.
Ninety percent of car-owners in India have some kind of audio-system installed in their cars. Many new cars nowadays come with OEM (company fitted) audio systems as part of the deal. Indians are music lovers and they like to carry their music collection on the go as well and hence they carry their favorite music in USB drives or CDs.
Take your music with you
Challenges and Opportunities:
Most of the current users expect the future cars to be further automated with enhanced features for comfort and safety. Others emphasize on connectivity with Internet and Bluetooth with in-built enhanced maneuverability, navigational and parking capabilities.
While these could be looked as roadblocks, the burgeoning Indian economy presents itself as one of the most lucrative growth markets in the world. With a plethora of indigenous, foreign and several multinational joint venture firms struggle to capture a pie, there are several opportunities that are worth noticing:
- The fight between Petrol and Diesel cars – with the recent hikes in petrol prices and with diesel set to remain stable (most of the govt. public transport services run on it) are the consumers willing to shell that extra buck for the diesel variant?
- With the traffic situation deteriorating every day, should companies focus on power or mileage?
- Do they invest in an extensive network of service centers and improve brand image or let multi brand outlets take care of it and save on cost and reduce prices?
- Should manufacturers target the youth with cheaper models and contemporary styling and play the volume game or should they rather play the price game with established designs with the more settled middle aged?
- Should companies focus their research budgets on enhanced accessories (climate control, navigation systems, voice control etc.) or improving core components (engine, fuel injection systems, etc.)?
- With the cars turning into more of a personal space and mini offices there is need for better communication devices to connect safely with others while driving and have a better audio quality