Industry insiders say lower youth unemployment and more financing options are driving up the average amount spent on a car, with many young buyers opting for a four-wheeler rather than a two-wheeler as their first vehicle. It is said that he has come to prefer wheeled wheels. .
What this means for automakers and advertisers is that they have had to change their communication strategies to better capture the attention of buyers who consume media in fundamentally different ways than previous generations. Thing. It also means automakers are increasingly filling their portfolios with models that appeal to younger, more discerning customers.
“The Indian car market is moving from functionality to aspiration,” Tarun Garg, chief operating officer (COO) of Hyundai Motor India, told ThePrint. “Before, it was all about getting from point A to point B at a lower price and higher fuel efficiency.”
“Customers are demanding more now,” he said. “They want better safety, better functionality, better design and better technology. This clearly reflects the ‘YOLO’ attitude of younger customers.”
Garg added that car buyers in India are getting younger and the company has been aware of this trend for some time.
He said the average age of a Hyundai car buyer has fallen from 43 in 2018 to 38 in 2023. Furthermore, buyers under the age of 30 now account for 27% of Hyundai’s new car customers, up from 12% in 2018.
German luxury car maker Mercedes-Benz India also claimed to see a similar trend. There is a growing desire to own a Mercedes-Benz among a young, successful and upwardly mobile customer base, said Santosh Iyer, Managing Director and CEO, Mercedes-Benz India. said.
“Our customers are getting younger and more professionals and office workers are becoming familiar with our brand,” Iyer said. “Average age is falling, and now the average age of an S-Class customer is only 38 years old.”Five years ago, the average S-Class customer was in his mid-40s.
“This also highlights an important shift. Younger buyers are now choosing our high-end portfolio, such as the S-Class and Maybach.”
When asked if Tata Motors is seeing a similar decline in the average age of car buyers, Vivek Srivatsa, Head of Marketing, Sales and Service Strategy, Tata Passenger Electric Mobility, said: . Especially among the younger generation, cars have gone from being just a necessity to a symbol of aspiration. ”
Srivatsa added that this paradigm shift is being driven by several fundamental factors that are reshaping consumer preferences. These factors include rapidly increasing disposable income, evolving lifestyle choices due to increased exposure to the internet, environmental awareness, a variety of attractive vehicle styles, especially SUVs, and flexible and attractive vehicle financing. options, etc.
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Looking for more features
According to Garg, as buyers are getting younger, they are looking for more feature-rich models and are demanding advanced features such as better connectivity, advanced driver assistance systems (ADAS), and sunroofs. Nowadays, SUVs and the top models of each model have higher approval ratings.
“You know, this is a mobile generation and they want to stay connected all the time,” he said. “The penetration of connected cars is continuously increasing. In the case of Hyundai, it was only 5% in 2019. In 2023 it will be 30%.”
Garg added that the share of sunroofs in Hyundai’s sales jumped to 45% from 17% in 2019, even though not all cars in the company’s portfolio are equipped with sunroofs. According to him, SUVs currently account for 60% of the company’s sales.
The company is also seeing a change in color preferences as customers get younger. Previously, white and silver, considered conservative colors, were the most popular. Garg said preferences have shifted towards black, the “starry” color.
For example, the black version of Creta accounted for 9% of sales in 2018, increasing to 32% in 2023. Similarly, Verna saw sales of the black version increase from his 26% to 40%. In the case of Ecstar, 30 per cent of sales come from the ‘khaki’ color, which is also a favorite color among young car buyers.
“A perusal of economic and demographic data makes it clear that car consumers are getting younger and more affluent,” said Shashank Srivastava, Senior Executive Officer, Marketing & Sales, Maruti Suzuki India. told ThePrint.
“The new-age consumer’s buying criteria has changed from functionality to aspiration,” he added, agreeing that other car companies are seeing the same thing. “This reflects the features and technology that Indian consumers prefer.”
According to Srivastava, OEMs have had to adopt new strategies to communicate with consumers as consumers’ media consumption habits have changed dramatically.
According to an internal study by Maruti Suzuki India, the country’s largest carmaker, the average age of a car buyer will be 37 years old in 2022, compared to 37.3 years in 2018.
Srivatsa echoed similar views, saying there is indeed a paradigm shift in consumer behavior today compared to five years ago. Where expectations were previously limited to features such as air conditioning and power windows, customers are now demanding more advanced features, and connected features such as touchscreen displays, voice recognition, and navigation systems are now standard. It is expected. Interestingly, he added that he sees a noticeable change between the buyer profile of his electric vehicle (EV) customers and his ICE (internal combustion engine) customers.
“Currently, traditional ICE customers are people who have minimal interaction with the OEM and are less demanding. They only want to contact them when their car has a defect or they want to upgrade their car. , or ask for contact. In contrast, EV customers actively seek out opportunities to interact with OEMs and prefer frequent communication channels. EV customers build communities around them. and become true brand evangelists, willing to serve as brand ambassadors without financial incentives. This is very similar to consumer behavior in consumer electronics,” he said.
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More premium features mean higher costs
Maruti Suzuki’s Srivastava said the average price paid by buyers across the auto industry rose from Rs 930,000 in 2018 to Rs 1.19 lakh in 2022.
For Hyundai, cars priced above Rs 1 million currently contribute about 50% of sales, compared to 21% in 2019. “So these numbers will tell you the economic impact and aspirations,” Garg said.
Maruti said cars priced above Rs 10,000 as a whole accounted for 15% of the segment’s sales in 2018-19, rising to 40% in 2022-23.
Srivastava cited a 2020 report by consultancy firm Boston Consulting Group (BCG) that the number of households with an annual income of more than Rs 5 million has increased from 51 million in 2010 to 95 million in 2020. He added that he did. This number is expected to increase to 190 million households. Also, his GDP per capita increased from $1,998 in 2018 to $2,515.
“Therefore, the overall wealth of India is increasing,” he says.
Economic and demographic trends mean trends will continue
The Monthly Economic Review for October 2023, published by the Ministry of Economy, said that according to the Periodic Labor Force Survey (PLFS), the youth unemployment rate (15-29 years old) has fallen to 10% from 17.8% in 2017-18. It pointed out. From 2022 to 2023. The labor force participation rate (LFPR) for this category increased from 38.2 percent to 44.5 percent over the same period.
“At the same time, the proportion of young people employed has increased from 31 percent to 40.1 percent over the last six years,” the report added.
India has the world’s largest youth population, with 66 per cent of the population (808 million people) under the age of 35. Despite estimates that the population will decline, India will still be a relatively “young” country in 2030, with 24 percent of the population under the age of 35. Population aged 15-29 (365 million people).
“With the changing corporate landscape in India, we are witnessing the emergence of young professional buyers,” Iyer said. “These new generations of customers, including doctors, engineers, lawyers, CPAs, start-up founders and entrepreneurs, are ambitious, have a taste for luxury goods and bring with them a significant consumer culture. .”
“These young customers are traveling the world and want the best in luxury and technology in their cars.”
Garg added that this trend can definitely be linked to the economy, especially fast-growing sectors such as IT. But he added that the most important factor is easy access to funding and increased motivation.
According to data shared by Maruti Suzuki, the number of cars purchased using financing options increased from 89% across the industry in 2018 to 91% in 2022.
“India is now gradually starting to image its global peers from a market perspective,” Garg said. “Unless it’s the bottom end. [entry level cars] The industry doesn’t grow when it grows, but that’s not true. ”
“This year, the industry is expected to grow around 8%, even though the bottom end is not growing,” he added. “This shows that customers who previously bought entry-level cars are now shifting to higher segments. And this is coming as more younger customers come into the store. It is a desire to come.”
The increasing number of young people buying four-wheeled vehicles may also indicate a shift in preference for two-wheeled vehicles as a first vehicle. Lifestyle. Factors such as safety, ease of commuting, cutting-edge technology, and changing urban dynamics are shifting youth mobility preferences from two-wheelers to cars. Owning a car symbolizes status, convenience, and safety on the highway, while advanced features attract tech-savvy buyers. So, we are starting to see a visible shift in buyers in India,” Srivatsa added.
(Edited by Tony Lai)
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