Shorter Vehicle Delivery Time Impacts Dealership Selection in India

India02Although dealer proximity is still the most influential reason for choosing a dealership in India, new-vehicle buyers cite immediate delivery as an emerging key consideration, according to our 2013 India Escaped Shopper Study (ESS). More than one-sixth (16%) of customers cite immediate delivery as the most influential reason for selecting a dealer, up from just 8% in 2009.

In addition, a longer delivery time is cited by new-vehicle buyers as the second-most influential reason to reject a vehicle that shoppers had initially considered purchasing. The interest in vehicle delivery is related to the final decision process. Once the decision is made and the payment and other processes are completed, new-vehicle owners want to immediately show off their prized possession. Continue reading ›

Certified Used Vehicles are More Attractive to India’s New-Vehicle Buyers


Mohit Arora

Some 13% of new-vehicle buyers in India considered a used vehicle during their shopping process—an increase of 10% over the past three years, according to our 2013 India Sales Satisfaction Index (SSI) Study, which evaluates sales satisfaction among 8,434 new-vehicle owners who purchased their new vehicle between September 2012 and April 2013.

Findings show that more than one-third (37%) of new-vehicle buyers who considered a used vehicle this year indicated using the Internet during their shopping process to find information about vehicle financing, trade-in options and service-related issues.

In contrast, only 27% of new-vehicle owners who only considered new vehicles used the Internet for shopping, primarily to look up vehicle features and specifications. Continue reading ›

What Dealers, OEMs Can Do to Offset Sluggish Market in India


Mohit Arora

A slowing economy in India is creating more pressure on the country’s auto industry. In light of dimmer economic conditions, Mohit Arora, director and country manager at J.D. Power Asia Pacific, discussed the outlook for India’s dealerships and auto sales in a column in India’s Businessworld magazine. Excerpts from the column titled “Is it All Doom and Gloom at Car Dealerships?” are highlighted in this post:

Economic Front

A slowdown in GDP growth, industrial production and a decline in the value of the rupee against the U.S. dollar have observers jittery about India’s future growth prospects. Anticipated increasing pressure on inflation from higher fuel costs also is expected to negatively impact household expenses. It’s not surprising, then, that the automotive industry is feeling the pressure, with year-over-year new-vehicle sales down in double digits as fewer consumers visit their local showroom to buy a new vehicle.

What Do Dealers Anticipate?

Recently, we asked more than 600 auto dealers in India about their business and how satisfied they were with the support they were receiving from the manufacturer. The results from the J.D. Power Asia Pacific 2013 India Dealer Satisfaction with Automotive Manufacturers Index  Study (DSWAMI) showed that one in five dealers expected to report a loss in the financial year (2012-2013), which is up from 9% in the previous year. In addition, less than one-half (44%) of dealers anticipated that they would make a profit—down from nearly two-thirds (62%) in the prior year. Continue reading ›

Maruti Suzuki, Toyota Earn Most Segment Awards in 2013 India VDS

Maruti Suzuki and Toyota each earn two awards for producing models with the fewest problems per 100 vehicles (PP100) in their respective segments, according to the J.D. Power Asia Pacific 2013 India Vehicle Dependability StudySM (VDS). Other nameplates earning segment-level model awards for vehicle dependability are: Honda, Chevrolet and Ford.

Although there are 11 . . . Continue Reading Maruti Suzuki, Toyota Earn Most Segment Awards in 2013 India VDS

India’s Auto Dealers Anticipate Lower Profits; Express Need for Exciting Models


Mohit Arora

Only 44% of India’s dealers expect to be profitable in the 2012-2013 fiscal year, partly due to a slow-down in new-vehicle sales as well as a dip in satisfaction with the available product lineup, according to our 2013 India Dealer Satisfaction with Automotive Manufacturers Index (DSWAMI) Study.

The study, which is based on responses from 618 dealership general managers or principles across all major nameplates, measures dealer satisfaction with automakers and importers in India* and identifies dealer attitudes about the retail business now and in the future.

Key findings from this year’s study are highlighted:

• In 2013, the largest decline in dealer satisfaction is in parts operations, with notable brand level declines in the areas of prompt delivery of parts and ease of ordering parts.

• Satisfaction with product lineup also declines this year. On average, 82% of dealers indicate their brand provides a model range that is effective in a highly competitive auto market. Continue reading ›

India’s New Budget May Hamper Local and Foreign Automakers

Much to the chagrin of the auto industry in India, the country’s Finance Minister P. Chidambaram in his 2013 Budget raised duties for utility vehicles (SUVs and MPVs) and fully-imported luxury cars.

India02The changes mean that excise duties for SUVs and MPVs were increased from 27% to 30%, excluding vehicles that are registered as taxis. In addition, India’s government now defines utility vehicles to be over four meters in length (slightly more than 13 feet or 157.5 inches); with 2.5L engine capacity and a ground clearance of at least 170 mm (6.7 inches).

This definition, especially the new criteria for ground clearance, also will subject certain passenger cars, including the Honda Civic and Maruti Suzuki SX4 to the higher duty, while at the same time allowing utility vehicles like Mahindra’s Quanto or Renault’s Duster to be taxed a lower rate.

In preliminary analysis of this change in the taxes, the SUV sales forecast for 2013 may be cut by up to 5%, although the long‐term outlook for the segment remains positive. The only silver lining is that upcoming compact SUVs (of less than four meters) may help offset some of the impact of this new higher excise duty on larger vehicles. Continue reading ›

Suzuki Leaves U.S. Auto Market; Focuses on Asian Markets

After 27 years in the United States, Japan’s Suzuki Motor Corp. will stop selling its current lineup of four models here and concentrate on other parts of its global business, particularly business in India and Southeast Asia. The company, which is a major mini car maker in Japan, will continue to market motorcycles, all-terrain vehicles and marine engines in the United States, according to a company statement.

Recently, Suzuki’s U.S. distributor filed for Chapter 11 bankruptcy protection in California. Declining sales, a small, aging product lineup, and the strength of the yen were listed as reasons for the Japanese automaker’s decision to exit this market. Separately, Suzuki has stated that it will continue to sell vehicles in Canada, where it once operated a joint venture production plant with General Motors.

In regard to dwindling sales in this market, Suzuki, with a lineup of four models in the U.S. market, sold only 21,172 units through the first 10 months of 2012, which was 5% fewer than last year. Sales have been sliding during the past few years. In fact, Suzuki had its best sales year in the United States five years ago when it sold 102,000 vehicles. Since the company still has 220 U.S. car dealerships, it plans to work out an agreement with dealers to continue to serve current Suzuki vehicle owners with parts and service. All warranties will be honored, according to a company statement.

Suzuki to Focus On Stronger Asian markets

The Japanese automaker may be leaving the U.S. auto market, but plans to bolster its business in other parts of the world—especially in the growth markets of India and Southeast Asia. Currently, Suzuki has a 3% share of global auto sales—the same as in 2011, according to analysis from our strategic partner LMC Automotive.

Region 2011 2012
Global 3.0% 3.0%
Japan 13.4% 12.3%
India 33.8% 33.5%
ASEAN 3.2% 3.7%

 Source: LMC Automotive

Its Maruti Suzuki India unit is a market leader in that country, and deliveries accounted for nearly 40% of the company’s total 2.49 million unit sales in its last fiscal year. This year, Suzuki’s market share in India—though still the largest—is 33.5%, down slightly from 33.8% a year ago. Continue reading ›

The Politics of Diesel in India are Complicated

Ammar Master

It is never easy to run a government in a socially and economically sensitive society, especially when that government is dependent upon a number of allied partners with diverse and often different viewpoints on almost every issue.

This is the precarious position of India’s government, which is led by Manmohan Singh, United Progressive Alliance (UPA), after his administration decided to implement a number of long overdue reforms including a 14% hike in diesel fuel prices in mid-September.

A multi-party coalition has broken apart after a major partner, the Mamata Banerjee-led Trinamool Congress, decided to withdraw its support for the current government. Ms. Banerjee is the same leader who protested against the construction of Tata Motors’ Nano car plant in her home state of West Bengal, which forced the automaker to abandon its production plans in the state.

Admittedly, Ms. Banerjee is not alone in this latest disagreement. Several other opposition parties have also criticized the government for its decision to not only increase the price of diesel, but also to allow foreign direct investment in the retail sector. On the streets, opposition parties and trade unions have protested across India against the government. Schools were shut, while road and rail transport were disrupted in several areas. Continue reading ›

Cross-Shopping Multiple Models Increases In India

Mohit Arora

More of India’s new-vehicle buyers are shopping around and looking at multiple vehicles during the car-buying process than ever before. This year, 28% of new-vehicle buyers in India considered one or more vehicles before making their ultimate purchase decision, which is up from just 23% in 2011, according to our 2012 India Escaped Shopper Study.

Repeat buyers tend to be driving this trend of cross-shopping. One-third of these buyers (those who are purchasing a second vehicle or replacing a household vehicle) considered one or more models during their shopping activity this year—up 9% from 2011. In contrast, first-time buyers tend to be more conservative and their cross-shopping rate remains largely unchanged from 2011 at 20%.

Our study also finds that repeat buyers are more involved in the shopping process and are more likely to visit a dealership and test drive new models before making their purchase decision. It appears evident that the increase in cross-shopping has also risen due to the launch of several new models and a wider range of vehicle choices in the market. Continue reading ›

OEMs in India Plan to Invest in Popular Diesel Powertrains


Ammar Master

Vehicle makers have revived their plans to invest in diesel engine manufacturing facilities in India after the Indian government decided not to implement any additional tax on diesel-powered vehicles in the Union Budget 2012‐13 that was announced earlier this year. The decision to further invest in manufacturing is being driven by the strong demand for diesel-powered vehicles, which account for nearly half of all passenger vehicles sold in India, suggests Ammar Master, senior analyst, LMC Automotive*. Excerpts from a recent perspective in partnership with J.D. Power Asia Pacific on diesels in India:

“The main reason behind the strong demand for diesel-powered vehicles is the cheaper price of diesel at the pumps. In fact, the price gap between diesel and gasoline (petrol) has widened by as much as 40% since the government deregulated gasoline in June 2010.

As a result, the unexpected surge in demand for diesel vehicles caught India’s largest vehicle maker Maruti Suzuki off guard and the company lost sales. Continue reading ›