Second-time car buyers steer sales into fast lane

Second-time car buyers steer sales into fast lane

Author | Source: The Economic Times | Monday, Jun 19,2006 7:11 AM

Second-time car buyers steer sales into fast lane

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.

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