Riding on the cusp of emerging customer needs and disruptive innovations in technology, the Indian passenger car market has witnessed a steady growth over the past one year. Valued at USD 30 billion in 2020, the market is projected to expand further, registering a growth of over 9% between 2020-25 [1].The general economic recovery as well as an increase in consumer disposable income has fueled this growth, while the onset of the COVID-19 pandemic has shifted the balance in favor of personal mobility.
Against this background, the way consumers buy cars has also changed a lot. Cars are no longer viewed from a purely functional standpoint. Instead, people are actively looking for cars that offer innovative features, customization and better safety. With the increasing awareness about the environment, the preference for low-emission vehicles such as electric vehicles (EVs) has also increased.
safety first
on a global scale As well as within India, buyers today prioritize safety over factors like speed or mileage when making a purchase decision. Concerns about accidents and accidents have prompted customers to verify whether the car they are buying is safe for them and their families. This has prompted car manufacturers to upgrade their safety features.
On this front, Tata Motors has done well with the Nexon and recently, the Punch has been rated as the safest cars in India with a 5-star rating. GNCAP Rating and New Forever range is the safest range of Passenger Vehicles (PV) available in the market today. Notably, the company’s revenue from PV grew 106% in FY2011 [2], testifying to the inclination of customers to buy vehicles with high safety standards.
Shifting Priorities: The SUV Revolution
Existing aspirations within consumers, and the launch of a range of innovative models at affordable price points by major automakers have helped usher in an SUV revolution in India. Promising higher stance and seating position, SUVs not only offer greater road visibility than other models but also offer several innovative features.
In particular, sub-compact SUVs or mid-size sedans that allow easy maneuverability on busy roads, and are packed with features, have steadily increased in popularity over hatchbacks, which were previously dominant in the PV segment. In fact, the growth momentum in SUVs is expected to continue, with its share estimated to be over 60% of the PV market. [3],
Millennial customers and increased purchases of used cars
While the pandemic has taken a decisive step towards lifestyle changes and personal mobility, the rise in new vehicle prices has propelled the used car market to flourish. Millennials are surprisingly at the forefront of buying pre-owned vehicles. With a large number of millennials entering the workforce and starting to earn, young buyers account for more than 80% of the buyer base [4],
Shorter ownership periods, the need for low-cost personal transportation, and the rise of online platforms to buy certified pre-owned cars have further contributed to the growth of the used car market. Interestingly, though the majority of used car buyers are young men, the number of women buying used cars has also increased significantly.
Coming to women buyers, from FY19 till now, there has been a dramatic increase in the percentage of single female car buyers for both Tata Motors as well as the auto industry. In India, women account for 12-15% of all automobile buyers, which is by no means a small number. In addition, the average age of our female buyers has come down by 10% from 36 years to about 32 years in the last few years. The percentage of working women buyers has increased from 50% to 65%. Interestingly, since 2019-20, the weekly usage (No.) kilometer operated by women) has almost tripled.
Easy Financing – Making Dreams Come True
With Millennials in the market for aspiring car owners to own, easy financing has become like a cherry on the top of the cake. More and more banks are now coming forward exclusively in tie-up with OEMs and providing the best offers available in the market. With offers like 90% – 100% financing on on-road pricing, lower rates of interest, extended repayment tenure, zero foreclosure and partial payment charges among others, buying a car has never been this simple and economical. As a result of which, today around 80-85% of buyers are seen using financing as a means of buying the car of their dreams.
looking forward to the future
Among other trends that are likely to become important over the next decade, electrification is certainly the most prominent. While EVs are already gaining traction in the market, the lack of charging infrastructure and some pertinent reasons for concern regarding limited range, hinder their whole-hearted adoption. However, many of these factors are seeing change for the better. Other related technical features, such as connectivity and digital technology, will also play a big role in defining the age to come.
The automotive sector has responded to the ever-changing consumer preferences and changing needs of an era. This era is no different. At the heart of the present and future of mobility will be the values that define the contemporary buyer, providing secure, connected, feature-driven and sustainable choices.
Disclaimer: The views and opinions shared in this article are solely those of the author. These views and opinions do not represent the views of The Times of India or any of its employees.
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