J.D. Power releases India Escaped Car Shopper Study

J.D. Power, a market research company best known for its Initial Quality Survey (IQS) ratings has come up with the India Escaped Car Shopper Study, a study that delves into the process of car buying and car rejection among Indian car buyers.

A brief introduction

The increasing number of cars in developing nations is a sign of economic progress. Cars form a part of discretionary purchases in most if not all parts of the world. Hence, car sales can be used as an indicator of the overall health of the economy.

Higher car sales indicate positive sentiment and the greater ability of the consumer to make large purchases while lower car sales indicate weak economic sentiment as discretionary purchases are usually the first to get the boot during hard times.

Car buying behavior often explains how industrialization is shaping up in the various regions of a developing country. This behavior is used by marketeers to tailor many other products that center around cars and the mobility that cars empower their owners with.

The broad overview of the survey is represented by the following points:

1. Nearly 70 percent of buyers in the West and 57 percent of buyers in the East are purchasing a new vehicle for the first time. 

CarToq’s interpretation

First time buyers highest in Western India

A car is usually the second largest purchase made by an Indian household, after a home of course. Buying a car is considered a sign of “one having arrived in life”, a signal of one’s progress. In a nutshell, cars continue to remain status symbols in India rather than just basic means of transport like in the western world.

Therefore, when a greater  number of car buyers in a particular part of India are biased towards new cars, it usually means that those parts are experiencing a higher amount of growth in terms of economic prosperity. Also, it signifies the overall higher buying power of people shifting from two wheels to four.

2. Although attractive design and styling have increasingly become the most influential reason for vehicle selection among buyers in the North region, it has been declining in the South, where new-vehicle buyers frequently state good fuel efficiency as a reason for purchase.

CarToq’s interpretation

Design and styling sells in the North; fuel efficiency in the South

Point 2 taken in conjunction with points 5 and 6 mean that car buyers are gradually moving towards buying cars more for their real world utility rather than for the status cars offer them. Also, fuel prices tend to be higher in the Western, Eastern and Southern parts of the country, leading to car buyers from these regions favouring cars that are more fuel efficient. Also, a higher focus on fuel efficiency may also mean greater distances traversed in cars.

3. New-vehicle buyers in the South region are more methodical in their purchase process

4. Internet usage for research during the vehicle-shopping process has increased in the South region to 42 percent in 2013 from 21 percent in 2009. In contrast, in the North, shoppers are highly influenced by the opinions of friends and relatives

CarToq’s interpretation:

Friends’ opinions matter in the North; South researches more before buying

Internet marketeers and advertisers take note. The southern region of the country seems to be relatively more connected to the internet than northern parts. Also, car buying through internet research showing a big increase from the south indicates that the value of online automotive fora/media properties is going up.

Also, internet research evens the field by empowering and informing the car buyer. Car research websites dole out a host of information about car prices, features, specifications, financing and insurance options, so much so that buying decisions, save for the test drive, can be arrived at in front of the car monitor. Sales forces at dealerships will have to work harder offline while also bolstering their online presence to reach out to potential buyers directly.

Word of mouth seems to be working better in the northern part of the country, but with internet penetration improving rapidly, expect the northern part of India to eventually catch up. Whichever way you look at it, the online medium is poised to become more dominant, by putting information at peoples’ fingertips.

5. While the number of households owning multiple vehicles is at least 1.6 times higher in the North than in any other region, the average number of people riding in vehicles is much higher in the West and the South regions. 

6. The penetration of small cars is declining at a faster pace in the North region, with consumers increasingly preferring larger vehicles. 

CarToq’s interpretation:

North has bigger cars, drive less; South drives more per car!

Points 5 and 6 once again underscore the impression of cars being status symbols in the northern parts of the country while they are more of practical workhorses down south. As a car maker, offering chromed accessories and jazzed up after market parts is likely to work better in the northern part of India. The penetration of small cars is declining also indicates that the overall level of affluence in India is increasing steadily.