on 11, Oct 2014

A few years back, automotive industry has witnessed the worst phase. A slowing global economy, coupled with declining consumer confidence, had translated into dismal new car sales in most markets. But this slump has led to many industry advancements. Standards of quality and productivity, for example, have been raised without a corresponding increase in price. Cars today are safer, more fuel efficient, and more technically advanced than ever.

Top this up with the #NaMo or #Modi wave, India’s growth story seems very promising. The car sales in September 2014 rose to 4.68%. This is good news for industry, since the month of September also had a 15 day Shraadh period, which is considered to be inauspicious for new purchases. In this festive season, a significant increase in car buyers is expected which will accelerate the positive momentum already being experienced in the last few months.

A massive shift in the competitive landscape will see India emerge as one of the major players in the industry. An era of “conscious consumption” is emerging. Customers around the world are becoming cost conscious, especially in the developing world where millions of drivers will make their first ever car purchase.

In the next few years automotive industry will see a dramatic change in customer buying preferences in its 100-year history. A shift from small hatch back cars to high-end models packed with features making cars safer and comfortable will occur in emerging markets. Advancements in alternative technologies will also transform consumer mobility. New sales models & dealership models in emerging countries will evolve. This phenomenon has begun with the advent of digital transformation.

Conscious consumption – a growing emphasis on value

In emerging markets, car ownership is becoming more widespread, and yet the gap between car ownership in major markets such as Brazil, Russia, China, India, and the developed world remains significant. In the United Kingdom, for example, there are 511 cars on the road for every 1,000 citizens. But in high-growth China there are only 22 per 1,000, while in equally booming India, there are only 11 per 1,000. The demand is huge & with a tremendous growth potential. Car ownership in the developing world is set to rise. The largest purchasing segment by 2020 will be of those customers buying a car for the first time. They, too, are expected to be value conscious. India provides a telling example.

Safety first – consumers to be attentive to innovations

According to the Consumer Reports survey on car brand perception in India, while price and fuel economy are most important, safety falls right behind. It comes as no surprise, then, that consumers surveyed in India indicated a willingness to pay a premium for features and options such as Anti-lock braking system (ABS) and Electronic Brake System (EBS)

Staying connected — the need to be networked

With the spilling over of mobile communication technologies into the automotive industry with younger and often more connected Gen Y consumers driving this change, Car manufacturers across the globe are looking to put innovative features in their cars to enhance the experience of owning and driving a vehicle. From drivers receiving real time traffic information and navigation guidance, to passengers accessing their music and movies via cloud based infotainment, to car manufacturers keeping vehicle software updated over-the-air, to automated and driverless automobiles, the future vehicle will need to communicate and stay connected with the outside world via seamless access to the Internet over wireless networks

The web – internet as a sales channel

“To be successful, car marketers must use the internet to develop virtual showrooms that can be easily navigated by customers.”— RC Bhargava, Chairman, Maruti Suzuki India

More and more customers are turning to the internet while purchasing a car. While the need to test drive is the major barrier to online sales, customers are also hampered by:

  • An inability to access accurate and complete product and pricing information online
  • Unsuitable interface to negotiate on pricing with dealers
  • Concerns about payment and delivery
  • Lack of integration with related services, such as financing and insurance
  • Low connectivity rates and internet access in emerging markets


But OEMs and dealers are clearly attracted to growing the online sales channel. Another source of hope for online sales resides in emerging markets such as India, where the commoditization of vehicles at the entry-level will reduce the need to compare and negotiate with a dealer over options and price. Car accessories and after sale service purchases are already strong online and will continue to grow.

The next chapter in industry history

Over the next few years, the automotive industry as a whole will experience dramatic transformation. The economic crisis has acted as an accelerant, placing pressure on many companies & process to change.

In emerging markets, an entirely new class of car buyers seeks low-cost, low-tech cars; while a significant segment of newly wealthy customers want more luxurious brands. But the most important factor will remain price. Other new technologies, those that enhance safety, efficiency, and connectivity, will also be important to the customers.


Leave A Comment


Subscribe to get notifications on deals and latest news.