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Old 29th October 2012, 11:09   #1
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Default First-Time Buyers opting for Bigger Cars

Hello Friends,

Greetings.

Came across an interesting article in today Economic Times:
Rising income, paucity of diesel options drive first-time buyers toward bigger cars.
Full Article here: http://economictimes.indiatimes.com/...w/16998953.cms

Some important points from the article:
1. First-time car buyers opt for more feature rich, spacious hatchbacks and sedans thanks mainly to the rising disposable income and paucity of diesel options at the entry level, drove people to opt for slightly bigger small cars.

2. While the rising interest rates, fuel prices and inflation have forced many potential car buyers to defer purchases, the ones who could afford a little bit more are stretching to compact cars that are available with good diesel options

3. Between April and September of 2012, the share of small cars (Maruti Suzuki's Alto, 800, Wagon R, Zen Estilo; Hyundai's Santro, Eon and i10; Tata's Nano and Indica and Chevrolet Spark) dropped to 32 per cent from 52 per cent it enjoyed in 2007-08 and the share of smaller premium hatchback in the same period jumped to 20 per cent from 9 per cent in 2007-08.

This means that the action in Indian Car market will shift from Small cars to Medium Cars & SUV's? Does this also means that Maruti's strategy of focus on bigger cars in future (http://www.team-bhp.com/forum/indian...gger-cars.html (Maruti Suzuki to Increase Focus on Bigger Cars)) is right in line with chaning market dynamics?

Does this also means that news mini-Siv's in sub-4 meter category will do exceptionally well?

Thanks,

Last edited by Jignesh : 29th October 2012 at 11:16. Reason: Title edited
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Old 29th October 2012, 11:50   #2
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Default Re: First-Time Buyers opting for Bigger Cars

The above article like all of Economic times article is recycled thrash. Just copy paste from whatever online trolling they can retrieve.

If they are comparing the period 2007-08 with 2011-12 then minimal research would have shown that there was a clear lack of bigger hatchbacks and small sedans in 2007 compared to 2012. Secondly the price difference between diesel and petrol was not so high, also petrol was more reasonbly priced at around 45-50Rs/liter

Have they considered that the new Alto800 got some 30k bookings since time of launch? Is that a mid size hatch or sedan? If we take a look at teambhp monthly sales data, the only segments which are growing are hatchbacks and SUV's, infact the sedan segment is shrinking!

Whats happening now, is people are clearly stretching a bit more and buying whatever cars that have a diesel option. This is because of the moronic fuel pricing by the govt. Since the really small hatchbacks dont have diesel option, their sales are dwindling. To factor this change as people now want to buy bigger car is a wrong interpretation.
The moment an Alto or Nano come out in diesel or petrol and diesel price difference reduces, see how the markets start buying entry level hatches.
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Old 29th October 2012, 13:08   #3
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Default Re: First-Time Buyers opting for Bigger Cars

If you take the overall fall in care sales over the entire period, the claims of the article jsut fall flat. The rising disposable income argument sound so much like the "india shining' campaign though!!! disposable income have not risen over the last couple of years.

potential buyers of entry level hatchbacks are msot price sensitive, and have simply deferred their buying decision. that explains for the fall is sales in cars like alto santro etc.
The one's who could afford more have always stretched their budgets.Who would buy an Alto if he/she could afford a Swift??
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Old 29th October 2012, 15:23   #4
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Default Re: First-Time Buyers opting for Bigger Cars

I for one see some sense in the article, its not purely junk reporting.

Most new car buyers are more aware these days, especially when it comes to features in the car (Sometimes safety, other times what all the car offers). I have also seen most car buyers these days look for ABS and Airbags while few years back these were considered pure luxury features.

So its quiet natural for new car buyers to skip the lower end cars and move to something in between. Not surprisingly Maruti 800 (Although it was the cheapest car) was seeing dwindling sales figures till MSIL stopped it.
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Old 29th October 2012, 16:08   #5
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Default Re: First-Time Buyers opting for Bigger Cars

Indians tend to be image conscious with their purchases in general and for many (thankfully not all), utility takes a back seat. Here is a conversation I had with a friend in college:
  • He: Dude, I want to buy a tablet.
  • Me: Why do you need a tablet ? You have a laptop for gaming and productivity, an android smartphone for connectivity and you dislike ebooks and buy only physical books.
  • He: Yeah but I still want one.
  • Me: Why ?
  • He: My roommate, and several people around me all have tablets and I feel left out without one.
  • Me: <facepalm>
The hatchbacks in general are labelled "small cars" and sedans and SUVs "big cars". It doesn't matter that the DZire, Quanto and the i20 are nearly of the same length. The i20 which is better equipped is still called the smaller car, lesser in image than the other two.

A-segment cars which once mobilized entire families have today been relegated to the role of 2nd or 3rd cars for small errands and use by the ladies.


PS: Another reason A-segment cars don't seem to click in cities without CNG supply is because of the absence of diesel engines in them and everyone wants a diesel/CNG today thanks to lengthy daily commutes and ever increasing petrol prices.
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Old 29th October 2012, 18:29   #6
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Default Re: First-Time Buyers opting for Bigger Cars

Quote:
Originally Posted by mayankjha1806 View Post
Most new car buyers are more aware these days, especially when it comes to features in the car. I have also seen most car buyers these days look for ABS and Airbags while few years back these were considered pure luxury features.
I agree. Also considering the fact that growing number of urban homes consists of atleast 2 or 3 earning members & a figure of Rs. 5 lacs does not even raise eye-brows like it would have done five years back. Also safety, quality & confort are now considered very important by educated masses.

I mean today spending Rs. 7 - 8 lacs for a Car in India is normal for a growing number of families.

Quote:
Originally Posted by MHG View Post
Indians tend to be image conscious with their purchases in general and for many (thankfully not all), utility takes a back seat. The hatchbacks in general are labelled "small cars" and sedans and SUVs "big cars".
Hello MHG,

Absolutely valid point. Car in India even today remains a luxury for large part of population & on many occasions Car is bought more for pride than for utility & comfort. I am sure we have seen many Car buyers stretch their budget by couple of lacs just to buy a bigger Car so that their pride is enhanced. This is similar to large number of cell phone users sporting a Rs. 25000+ smartphone and using just its basic features.

Thanks,
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