73% of 1st time car buyers in India financed their car
The study takes in into consideration reasons new-vehicle shoppers give importance to but ultimately reject certain cars in favour of another. Through 2014, 27% of first-time new-vehicle buyers in India seriously considered a model other than the one they did buy, up from 20%in 2012. Keeping in mind that nearly three-fourths (73%) of first-time buyers financed their car in 2014, up from 64% in 2012.
It comes as no surprise that prospective buyers are cross shopping to get the best value of their car loan as compared to those who do not opt for financing. 30% of buyers who finance their vehicle also consider other vehicles when compared to 25% of those who pay cash for their car. 35% first-time vehicle buyers have a monthly household income of Rs 50,000 or more in 2014, in increase from 18% in 2012.
Despite inflation, rise in income levels teamed with greater availability of credit gives first-time car buyers in India an opportunity to evaluate choices across segments and price bands says Mohit Arora, executive director at J.D. Power Asia Pacific, Singapore. This is key data for automakers to evaluate in their quest to increase market share.
J.D. Power Asia Pacific Reports:
First-Time New-Car Buyers in India Are Evaluating More Vehicles during the Shopping Process
Maruti Suzuki Is the Most Considered Nameplate among Vehicle Shoppers in India
SINGAPORE: 30 SEPTEMBER 2014—With income levels rising and more vehicles being purchased through car loans, first-time new-vehicle buyers in India are considering more vehicles during the shopping process,according to the J.D. Power Asia Pacific 2014 India Escaped Shopper StudySM (ESS) released today.
The study, which examines the reasons why new-vehicle shoppers consider but ultimately reject certain models in favor of another, finds that 27 percent of first-time new-vehicle buyers in India seriously considered a model other than the one they purchased while shopping in 2014, up from 20 percent in 2012.One of the key aspects driving the increase in cross-shopping is the proportion of first-time new-vehicle buyers whofinance their purchase through a car loan. Nearly three-fourths (73%) of first-time buyers finance their vehicle in 2014, up from 64 percent in 2012.
The study finds thatbuyers who finance their vehicle tend to cross-shop more than those who do not opt for financing.Thirty percent of buyers who finance their vehicle also consider other vehicles, while only 25 percent of those who pay cash for their vehicle cross-shop. Furthermore, 35 percent first-time vehicle buyers have a monthly household income of INR 50,000 or more in 2014, up from 18 percent in 2012, which enhances their credit worthiness and enables them to qualify for a higher loan amount.
“While inflation rates have gone up in India, a rise in income levels coupled with greater availability of credithas given first-time car buyers the opportunity to evaluate alternative vehiclesacross segments andprice bands,”said Mohit Arora, executive director at J.D. Power Asia Pacific, Singapore. “This is vital for automakers in India to consider as they tryto increase their market share. Introduction of new body types across the various price levelswill likely add more vehicle choicesfor first-time buyers,who account for nearly half of new-vehicle sales in the country.”
• New-vehicle shoppers are increasingly placing greater importance on a vehicle’sinterior in their selection process. Among shoppers, 15 percent indicate the vehicle interioris the primaryreason they rejected a vehicle in 2014, an increase from 4 percent in 2012. Issues such asinterior styling, driver’s seat and rear-seat comfort are among the top interior-related reasons cited for rejectinga vehicle.
• Car buyers in India are spending more time researching their vehicle, as 35 percent indicate they researched the vehicle they purchased before visiting the dealership in 2014, up from 26 percent in 2012. Among buyers of newly launched models, 45 percent indicate they researched their vehicle in 2014, compared with only 24 percent in 2012.
• Overall customer retention drops to 38 percent in 2014, down from 40 percent in 2013.Ford, Honda and Hyundai have improved their customer retention rates the most year over year.
• Maruti Suzuki is the most considered nameplate among new-vehicle shoppers for the 10thconsecutive year, with 41 percent of all shoppers eventually purchasing one of its models. New-vehicle buyers who purchase Volkswagen, Ford and Renault models shop the most before purchasing their vehicle, while buyers of Mahindra, Maruti Suzuki,Tata and Toyota models shop the least oftenbefore purchasing.
The 2014 India Escaped Shopper Study is based on the responses from 8,499 buyers and 3,448 rejecters of new cars and new utility vehicles who purchased their vehicle between September 2013 and April 2014. The study, which examines the reasons why new-vehicle shoppers consider but ultimately reject certain models in favor of another, was fielded from March through July 2014.