Riding on the crest of evolving customer needs and disruptive innovations in technology, the Indian passenger car market has witnessed steady growth in the past year. Valued at USD 30 billion in 2020, the market is projected to expand further, registering over 9% growth between 2020-25 .General economic improvement, coupled with increases in the consumers’ disposable incomes,has spurred this growth, while the onset of the COVID-19 pandemic has tipped the balance in favour of personal mobility.
Against this backdrop, the way consumers buy cars has also changed considerably. Cars are no longer looked at from a purely functional perspective. Rather, people are actively seeking cars that offer innovative features, customizations, and enhanced safety. With growing awareness about the environment, the preference towards low-emission vehicles like electric vehicles (EVs) has also increased.
Globally as well as within India, buyers today prioritize safety over factors like speed or mileage when making a purchase decision. Concerns over crashes and accidents have pushed customers to verify if the car they are purchasing is safe for them and their family or not. This in turn has spurred the carmakers to upgrade their safety features.
On this front, Tata Motors has performed well with the Nexon and more recently, the Punch being rated India’s safest cars with 5-star GNCAP rating and the New Forever range being the safest range of passenger vehicles (PVs) available in the market today. Notably, the company’s revenue from PVs increased by 106% in FY21 , testifying to customer inclinations towards buying vehicles that have higher safety standards.
Shifting preferences: The SUV revolution
Existing aspirations within consumers, and the launch of a series of innovative models at accessible price points by leading automakers has aided the onset of an SUV revolution in India. Promising higher stance and seating positions, SUVs not only provide greater road visibility when compared to other models, but also offer a host of innovative features.
In particular, sub-compact SUVs or mid-sizedsedans that allow easy maneuverability on busy roads, and come loaded with features, have steadily grown in popularity over hatchbacks, which were earlier dominant in the PV segment. In fact, the momentum of growth in SUVs is expected to continue, with its share estimated to exceed 60% of the PV market .
Millennial customers and the rise in used-car buying
While the pandemic has ushered in lifestyle changes and a decisive move towards personal mobility, the rise in new vehicle prices has led to the flourishing of the used-car market. Millennials are unsurprisingly at the forefront as far as buying pre-owned vehicles is concerned. A significant number of millennials are entering the workforce and beginning to earn, with young buyers accounting for over 80% of the buyer base .
Reduced ownership periods, the need for low-cost personal transportation, and the rise of online platforms to purchase certified pre-owned cars, have further contributed to the growth in the used-car market. Interestingly, although most used-car buyers are young males, there has been a significant uptake in the number of women used-car buyers as well.
Speaking of women buyers, from FY2019 to now, there has been a dramatic increase in the percentage of single women car buyers for both Tata Motors as well as the auto industry at large. In India, women account for 12-15% of all automobile buyers, which is not a small number by any stretch. Furthermore, the average age of our women buyers has dropped by 10% to about 32 years from 36 years over the past few years. The percentage of working women buyers has risen from 50% to 65%. Interestingly, since 2019-20, the weekly usage (number of kilometres driven) by women has almost tripled.
Easy Financing – Making dreams come true
With millennials owning much of the aspiring car owners’ market, easy financing has become like a cherry topping the cake. More and more banks are now coming forward tying up exclusively with OEMs and providing the best offers available in the market. With offers like 90% – 100% financing on on-road pricing, low rates of interest, increased payment tenors, nil foreclosure and part payment charges amongst others, car buying has never been so simple and affordable. As a result of which, almost 80-85% of buyers today are seen using financing as a means to buy their dream car.
Steering towards the future
Out of the other trends that are likely to become significant in the next decade, the most prominent is certainly that of electrification. While EVs are already gaining traction within the market, some pertinent causes of concern, regarding the lack of charging infrastructure and limited range, continue to pose hurdles in their whole-hearted adoption. Though a lot of these factors are witnessing changes for the better. Other related technological features, such as connectivity and digital technology, will also likely play a big role in defining the era that is to come.
The automotive sector has always responded to changing consumer preferences and the transforming needs of an era. This era is no different.The present and the future of mobility will place at its center the values that define the contemporary buyer offering innovative options that aresafe, connected, feature-driven and sustainable.
Disclaimer: The views and opinions shared in this article are solely those of the author. These views and opinions do not represent those of Times of India or any of its employees.