Picket fence and two cars in the backyard. Sounds like the great American dream, right? Wrong. India's double-digit car sales, a growth trot second only to China in the automotive pecking order, has been fuelled largely by multiple purchases.
In other words, the volume spurt in the mid-size C-segment and above, is mostly driven by households, which have more than one car. And the trend is catching on in the compact segment as well.
Says M Takedagawa, president and CEO, Honda Siel, “About 70% of city customers are multiple owners. As the B to C upgrade kicks off, people are opting for two cars from two different segments. Most of the growth in the Indian market is coming from the households that already own a car rather than brand new customers.”
He has a point there. According to JD Power, only 37% of all Indian car buyers are first-timers, compared to 80% in China. “Even this figure is skewed because a lot of first timers are from car-owning households even if they haven't owned a car before,” says Arvind Saxena, VP, Hyundai.
The trend, say auto industry watchers, is turning stronger as the market matures. “Just 10 years ago, 50% of the market were first-timers. Now less than 3 lakh customers out of more than a million, are newbies,” says Mr Takedagawa. “Replacement or multiple ownership is driving growth in India.”
Most car makers ditto that dictum. Take Hyundai. As many as 28% of all Accent buyers take it as an additional car. Even when the new car isn't the second vehicle, a whopping 50-60% of all car sales are to households that already own a vehicle.
Consider the statistics - about 65% of all Accent buyers are upgraders from compact cars. Of this segment, 18-20% have driven stablemate Santro before. In the Santro segment, 42% of the buyers are M800 upgraders and another 5% previous Omni owners. And 23% of all Santro buyers are from the B-segment, with 9% swapping one Santro for another.