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KEYNOTE SPEAKER, HORMADZ SORABJEE, EDITOR AUTOCAR INDIA: AUGUST 19, 2011
Key takeaways
Mr. Sorabjee highlighted intriguing facts about changing customer preferences,
emphasizing the need for manufacturers to focus on value rather than price alone.
Consumer buying characteristics seem to differ in different car segments—while lower
end of the consumer segment is more price-conscious, the upper-end customer is more
focused on the features and performance of the car.
Price-to-size ratio is the most important consideration for consumers, which poses a
threat for new entrants. Consumers are willing to pay a premium for a three-box sedan in
India while in foreign markets both hatchbacks and three-box saloons could be sold at
the same price. However, styling is becoming extremely important for consumers.
Styling, fuel economy, interiors and performance are very high priority for car buyers
while safety and ride handling are the least important for a consumer while buying the
car.
According to him, word of mouth is the biggest influencer of sales and media has started
becoming an important influencer in customers’ buying decisions. Hence, manufacturers’
advertising budgets are increasing as competitive intensity increases.
The entry segment is most challenging segment for the new players because of low
margins and large volumes required to justify investments. So entry barriers are very high
and incumbents like Maruti Suzuki will continue to dominate this segment. Hyundai is
likely to launch its 800cc car to challenge Maruti Suzuki and could escalate competition in
this space. Volkswagen and Skoda are also likely to enter this segment by 2013.
The premium compact segment is relatively easy to enter and global models help in
providing scale for new players. Maximum competition is seen in this segment but this is
likely to be the fastest-growing segment in future. Popularity of diesel cars in this
segment is growing rapidly due to wide differential between petrol and diesel fuel prices.
The mid-size segment is also growing at a rapid pace driven by new launches. Diesel
vehicles are in strong demand in this segment and this segment is cannibalizing sales of
upper C segment cars.
Mr. Sorabjee believes that manufacturers have an opportunity to fill in product gaps like
mini SUVs and mini MPVs. Seven-seater options are most preferable in the MPV segment
and sub-4-metre length mini SUVs could give cost advantage to the manufacturers due to
lower excise duty.
He believes the Indian passenger car market is well-poised to grow at a rapid pace due to
low penetration, increasing income levels and reduction in cost of ownership of vehicles
(due to more fuel-efficient vehicles and use of alternate cheaper fuels like diesel, LPG and
CNG vehicles).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
KEYNOTE SPEAKER, HORMADZ SORABJEE, EDITOR AUTOCAR INDIA: AUGUST 19, 2011
Key takeaways
Mr. Sorabjee highlighted intriguing facts about changing customer preferences,
emphasizing the need for manufacturers to focus on value rather than price alone.
Consumer buying characteristics seem to differ in different car segments—while lower
end of the consumer segment is more price-conscious, the upper-end customer is more
focused on the features and performance of the car.
Price-to-size ratio is the most important consideration for consumers, which poses a
threat for new entrants. Consumers are willing to pay a premium for a three-box sedan in
India while in foreign markets both hatchbacks and three-box saloons could be sold at
the same price. However, styling is becoming extremely important for consumers.
Styling, fuel economy, interiors and performance are very high priority for car buyers
while safety and ride handling are the least important for a consumer while buying the
car.
According to him, word of mouth is the biggest influencer of sales and media has started
becoming an important influencer in customers’ buying decisions. Hence, manufacturers’
advertising budgets are increasing as competitive intensity increases.
The entry segment is most challenging segment for the new players because of low
margins and large volumes required to justify investments. So entry barriers are very high
and incumbents like Maruti Suzuki will continue to dominate this segment. Hyundai is
likely to launch its 800cc car to challenge Maruti Suzuki and could escalate competition in
this space. Volkswagen and Skoda are also likely to enter this segment by 2013.
The premium compact segment is relatively easy to enter and global models help in
providing scale for new players. Maximum competition is seen in this segment but this is
likely to be the fastest-growing segment in future. Popularity of diesel cars in this
segment is growing rapidly due to wide differential between petrol and diesel fuel prices.
The mid-size segment is also growing at a rapid pace driven by new launches. Diesel
vehicles are in strong demand in this segment and this segment is cannibalizing sales of
upper C segment cars.
Mr. Sorabjee believes that manufacturers have an opportunity to fill in product gaps like
mini SUVs and mini MPVs. Seven-seater options are most preferable in the MPV segment
and sub-4-metre length mini SUVs could give cost advantage to the manufacturers due to
lower excise duty.
He believes the Indian passenger car market is well-poised to grow at a rapid pace due to
low penetration, increasing income levels and reduction in cost of ownership of vehicles
(due to more fuel-efficient vehicles and use of alternate cheaper fuels like diesel, LPG and
CNG vehicles).
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