Put off by longer wait for delivery, car buyers switching choice: study3 min read . Updated: 01 Oct 2010, 11:05 PM IST
Put off by longer wait for delivery, car buyers switching choice: study
New Delhi: Spoilt for choice, more buyers of cars in India are turning away from their first selection if the wait for delivery is too long, a survey has found.
“I wanted to buy a Swift but it was not readily available and I was quite eager to change my previous car," said Samrat Kakkar, who works with a multinational company and in July bought a Honda Jazz. “So, I increased my budget a bit and bought a Jazz, which had comparatively lesser waiting period."
A study by auto researcher JD Power Asia Pacific analysing why some buyers end up purchasing a different car than their first choice found that 10% of those surveyed blamed long delivery periods, compared with 7% in 2009.
The survey, released on Friday, is based on responses of 8,029 buyers of cars and and utility vehicles between September 2009 and April, including 1,851 people who rejected their first choices for reasons such as long waiting periods or better pricing and design of newer models.
“The disparity between the automotive industry’s expected growth rate and higher-than-expected demand is the likely reason for the increased proportion of customers who have to wait for the vehicle of their choice," said Mohit Arora, executive director at JD Power Asia Pacific.
“Buyers have a lot of options these days," said Rakesh Batra, partner and national leader, auto practice, at consultancy firm Ernst and Young. “They would prefer models which are available immediately."
Top auto makers Maruti Suzuki India Ltd and Hyundai Motors India Ltd said they have not been able to meet the rising demand for cars because of a shortage of auto parts and an unexpected turnaround in the market after an economic slowdown.
Car sales in India have been on a rollercoaster ride since Diwali last year as increasing income, a strong economy and availability of low-cost loans have increased demand.
Domestic passenger car sales jumped to 160,794 units in August from 120,681 units in the same month last year, according to industry lobby group Society of Indian Automobile Manufacturers.
“The market took an unexpected turn. We did not anticipate this kind of demand in such a short span of time after the slowdown," said Arvind Saxena, Hyundai Motors’ director, marketing and sales.
“While many customers stayed loyal to us, a chunk of them considered other available options as well," admitted Maruti Suzuki chairman R.C. Bhargava.
“This demand has put component suppliers in a fix. Most of them are totally outstretched," Bhargava added. “Although they are are trying to keep up to the requirements, they need large investments to keep up with the growing needs of components."
The heightened competition has prompted auto makers to expand capacity. Hyundai Motors said last week that although its Sriperumbudur factory in Tamil Nadu is running in full capacity, it plans to shore up production by removing some bottlenecks, which will add at least 60,000-70,000 units a year to its capacity.
Beginning this month, Maruti is increasing production from its Gurgaon and Manesar plants in Haryana to a combined 110,000 units a month from 101,000 units a month now.
The study also found that buyers of new models are more inclined to evaluate at least one other new model, compared with buyers of models that have been in the market for some time.
“Buyers of existing models tend to be more conservative in their outlook and rely on the advice of their friends and relatives. Therefore, these buyers are more likely to have already decided on the make and model prior to purchase," said JD Power’s Arora.
The study also found that the most-frequently cited reason for deciding against a model—by nearly one-third of those surveyed—was high pricing. A car’s design was the next most-cited reason for a rejection, the study said.