New Buyers Prefer to Buy Expensive & Premium Variants: Impact of Covid-19
As per the data shared by varying carmakers, we find buyers prefer to buy both, middle as well as higher variants across model ranges and only a small percentage are prefer to choose entry level vehicles.
When Corona Pandemic began, automobile experts have predicted that there would be heavy downtradiing, hence there would a shift to cheaper alternatives, but the market has swung in an opposite ways, as many new buyers have opted to buy expensive models as well as premium variants.
The pandemic was expected to force the customers to spend very little and conserve more, but however, as per Hyundai Motor India, the nation's 2nd largest carmaker, buyers are restless and they are following the lockdown and numerous restrictions are levied and there is also threat of a 3rd wave of infection, this is one of the reason, which has led to impulsive purchases.
The customers are stretching their budget and they wish to have everything today, as if there is no tomorrow, stated Tarun Garg, director of sales and marketing at Hyundai Motor India, People have thought Covid-19 would lead to down trading, but the exact opposite has been happening.
Garg stated, that, Customers now, appear to be in a who knows, what would happen tomorrow frameset of mind.
As per the data shared by varying carmakers, we find buyers prefer to buy both, middle as well as higher variants across model ranges and only a small percentage are prefer to choose entry level vehicles. There has not been any car introduced in the sub-Rs 5 lakh segment range, over the past few years, while there has been a flurry of launches in the Rs. Lakh and above price bracket.
The above trend clearly indicates, buyers are in favour of expensive, feature rich trims. In some luxury brand, they have even phased out the entry variants because of lack of demand, stated a senior executive of a New Delhi based automotive company. With 80% the cars are mostly financed and auto loan rates are at an all time low, we find the buyers do not mind, spending more for features such as large infotainment units having premium music systems, automatic climate controls, rearview cameras, extra airbags, air filters, temperature controlled seats, and sunroofs to name a few.
People are buying cars so that they can take off on drives and they can drive to destinations and as well as make trips along with family and friends. They have been stuck at home due to work from home. Disposable incomes are high and there are not too many avenues like previous, so that they can spend, Garg stated.
The pandemic has brought about a shift towards personal mobility from public transport, while this spurred the number of 1st time new car buyers, those who already owned a car in the family also joined in.
The demand uptrend has come even after a cost escalation since January vehicle prices have been increased by an average of 5% this year due to higher semiconductor, steel and rare earth metal costs.
Mahindra & Mahindra, Hyundai, Maruti Suzuki and Tata Motors are all struggling to meet demand, even though they work and operate at optimum output levels, subject to the availability of input materials. Bookings are also expected to surge during the upcoming festive season.
While the car industry is sitting on an estimated inventory of 25 to 30 days, the ideal level at the start of festive season is about 40 to 45 days.
Demand is also very good and retail and order book are also very strong at the moment and they tend to prepare for the festive season, Garg stated.