First time car buyers move up the compact chain

Roudra Bhattacharya Chitra Narayanan New Delhi | Updated on December 12, 2011

Maruti Suzuki Swift Car.

The young seem to be getting richer and first-time car buyers are moving up from entry level Altos, Sparks and Santros to higher priced models like the Maruti Swift and Hyundai i10 or i20.

Maruti Suzuki, which has an almost 40 per cent share of the car market, says that three years ago only 18 per cent of first time buyers bought the Swift. Today, that figure is 33 per cent. Similarly, the first-time purchaser of WagonR three years ago was 22 per cent. Now it is 42 per cent.

Mr Shashank Srivastava, Maruti Suzuki's Chief General Manager of Marketing, thinks that the trend is due to aspirational buying. “We are seeing a shift in the first-time buyer preferences. Youngsters would prefer to wait and buy an aspirational product rather than buy the cheapest,” he says.

General Motors (GM), which sells cars under the Chevrolet brand, notes a similar trend. It says that around 20-30 per cent of new car buyers are going for premium hatchbacks. These are the young, upwardly mobile people — in the 25-35 age group.

“Reasons why first-time buyers are now opting for premium compact cars are that the finance options have increased, incomes are up, lifestyles have changed and also many more options are available in the segment now,” says Mr P. Balendran, Vice-President, GM India.

Hyundai Motor India's Director for Marketing and Sales, Mr Arvind Saxena says customers at the entry level do not want a basic car anymore, but demand more features, styling and quality.

“There will always be demand at the entry compact level, but customers will ask for more features at that price point. We used this insight when we developed the Eon,” he said.

According to Maruti's Srivastava, the average age of car owners has gone down from 39 years three years ago to 34 years now. This shift in the age profile has resulted in a change in car buying patterns. “We see a lot more experimentation now,” he says.

So Maruti is doing some rethinking in the way it markets itself and is tweaking products to appeal to the younger age group, changing its communication message and introducing a trendier retail experience. “Our campaigns are more edgy now — no longer PSU-like,” says Mr Srivastava.


Published on December 12, 2011

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