Trends in Indian automobile market are changing dynamically as compared to the global market. At the helm of this changing trend is the small car segment, with its ever-increasing sales. This change directly influences consumer’s buying patterns, which in turn changes the landscape of auto-finance in India. Mr. Aashish Deshpande – Head of Business Development and Marketing, Volkswagen Finance Pvt. Ltd. (Volkswagen Financial Services), puts things into perspective, giving a detailed insight on the changing automobile buying trends and its influence on the auto-finance industry in India.
Mr. Deshpande initiates the conversation by saying, “India is a unique market, and this uniqueness is evident with the dominance of small car segment in recent times. Approximately 90% of all the cars sold in India belong to this segment.” It’s easier for consumers to purchase small cars, as the primary reason to buy a car is to ease day to day commute. Recently though, there has been a noticeable change, as more people opt to buy cars with differentiated body types, because car buying is becoming a familial decision. Sedans, SUVs and Compact SUVs are gaining popularity among the masses, in line with global trends across the world. However, amidst all these changing trends, the mindset of an Indian consumer still remains the same; where the expectation is to avail the features of a higher segment car model at a lower price range.
Thepsyche of an Indian consumer is deal-driven rather than price driven. Customers demand deals that suit their needs, without burning a hole in their pocket. They seek all the features offered in bigger car models, without having to pay extra. Mr. Deshpande adds, “This makes the Indian market tough to market to, as far as profitability is concerned. Manufacturers in India face a stalemate catering to these market demands.” In other European countries for that matter, when it comes to consumer satisfaction in terms of delivering high quality products at the appropriate price, there is no such dilemma. However, a scenario like this benefits the auto-finance industry, because a consumer can make his desired purchase with the help of finance solution providers.
“The Indian automobile industry has a substantial foundation, which makes it a secure option for investors”, adds Mr. Deshpande. Captive finance companies like Volkswagen Financial Services, approach customers mainly through dealership-counter finance. Banks and other independent channels have started providing auto-finance with pre-approved loans, slowly shrinking the arena of the dealership-counter finance, disrupting the dealer margin.
On the other hand, a captive finance company such as the Volkswagen Finance Pvt. Ltd. provides a one-stop solution to its customers, catering to all their needs. Their customized, structured products come with unique propositions that haven’t been replicated yet, in the industry. Working alongside dealerships builds a dual progression for both parties, one that is beneficial to the industry as well as the consumers.
There is a rapid stir within the nation, as global trends continue to change. The future of Indian auto-finance industry seems bright with the changing trends of the automobile industry, and with exclusive financial services being catered to consumers, it’s bound to be even brighter.