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Rediff.com  » Business » Buying a car has become a high-tech affair in India

Buying a car has become a high-tech affair in India

August 28, 2018 15:26 IST

Customers, instead of visiting showroms, now do most of their decision-making in the comfort of their drawing rooms using internet

Carmakers in India, the world’s fifth-largest market, are no longer seeing a growth in footfalls at showrooms though the volume of sales is going up.

 

Companies say the frequency of visits per customer has seen a decline in recent years as buyers are relying more on product information available online to arrive at a purchase decision.

"The showroom footfalls are going down because the moment of truth is happening in the comfort of the drawing rooms of the customers. So, they are doing lot of research and finally coming to the showrooms.

"Earlier the customers used to make three-four visits to different showrooms before taking a decision," said R S Kalsi, senior executive director (marketing and sales) at the country’s largest carmaker Maruti Suzuki.

He said the conversion ratio was much better when they came to showroom well informed.

There is no surprise, despite lower footfalls, the Suzuki-owned company is consistent on double-digit volume growth year after year.

Veejay Ram Nakra, chief of sales and marketing at M&M's automotive division, said the shift in consumer buying behaviour had become much more evident in the past three-four years.

"Our overall enquiries have grown by 20 per cent between FY17 and FY19 but our walk-in enquiries have dropped by a similar percentage over the two-year period.

"Walk-ins now constitute 20-25 per cent of the overall enquiries today compared to 35-40 per cent in FY17," he said.

Customers' frequency of test drives is also on a decline. At M&M, the frequency of dealership visits by prospects for test drives has come down from 2.3 to 1.1 per customer in recent years.

According to Nakra, owing to an availability of a variety of search tools with customers today, more and more of them are turning to digital medium for information before walking into the showroom for a pre-decided purchase.

The third-largest player in domestic passenger vehicle market has seen a retail contribution from digital medium increase to as much as 30 per cent in FY19 compared to 10 per cent in FY17.

As of today, decline in footfalls is more prominent in metro cities and Tier-I cities as compared to the rest of the cities.

The influence of e-commerce, penetration of digital and adoption rates for online search and purchase, among others, have been much faster and deeper in cities so far, said Nakra.

Though sales have been expanding every year, some companies have not witnessed a drop in footfall.

A spokesperson at Korean carmaker Hyundai, the second-biggest player in domestic market, said the footfall at dealerships had remained mostly unchanged with a minor increase.

Tata Motors, which is trying to recover its lost market share with a complete new product line-up, said it was seeing an increase in footfalls.

"Tata Motors is seeing a new set of buyers and most of them are millennials. These customers are visiting dealers with a certain set of expectations in mind such as quick delivery, a 'first time right' solution to their complaints, and better prices that provide them with greater value for money,” a company spokesperson said.

Despite the drop in visits from potential customers, the industry with annual domestic sales of 3.28 million vehicles will have to keep on investing in expanding their presence and reach.

"Car is a very emotional purchase decision and also a high-value decision. During a purchase, most family members come together and make a visit to the dealers.

"Thus, it becomes important for the brands to have a robust sales network across the country to provide customers with the brand experience," the Hyundai spokesperson said.

“Though the frequency of dealership visits have come down, many prospects still make a visit for test drives and product experience. For this category of purchase, touch and feel of the product remain irreplaceable,” said Nakra.

Photograph: Reuters

Ajay Modi in New Delhi
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