Indian Automakers Respond to Young Buyers’ Demands

MUMBAI – Automakers are scrambling to keep up with, or at least not fall behind, the technological advances demanded by India’s young, tech-savvy generation.

A new generation of potential car buyers is emerging every five years and innovation is crucial for planners, says Mayank Pareek, president-advanced product engineering, Tata Motors. Half of India’s population was born after 1991, he notes.

The consensus among automakers is that only eight of the 35 new products launched in 2014 succeeded, and they expect a similar result for 2015.

“No longer can a product continue to have a good run for a decade,” says Pawan Goenka, executive director and president-Mahindra & Mahindra. “New-product life today is two to three years.”

To keep up with the changing market, some automakers are using more modular platforms and parts designed for multiple uses. This helps them develop product plans for up to 10 years while maintaining contact with young buyers. Maruti Suzuki, India’s No.1 automaker, is planning for the next 15 years.

Light trucks are losing popularity among today’s generation of young vehicle owners showing greater interest in sedans or larger hatchbacks rich in features and up-to-date technologies including infotainment, telematics, access to digital apps and complete Internet connectivity.

While demand is growing for vehicles with standard high-tech features, buyers seeking to keep costs down are following the BYOD (bring your own device) dictum. Regardless of the hardware, they want connectivity fully synchronized with the vehicle.

This demand has trickled down to B- and C-segment cars and is reflected in industry figures showing sales of cars grew 2.5% in 2014, the first time since 2009 car sales outpaced those of light trucks. The trend continued in 2015, as car sales grew 9.5% year-on-year through November while light-truck deliveries advanced 8.8%.

“Market growth in India is presently driven by the younger generation,” says Katsushi Inoue. CEO-Honda India. “We are going to launch from time to time models wanted by them.”

Honda has taken the lead among automakers in forming an R&D division dedicated to tailoring models to the demands of a young market, and in using social media as a communication tool.

Honda’s success is underlined by the popularity of its best-selling Amaze compact sedan offering a fuel-efficient diesel engine and a comfortable cabin. The larger City sedan is packed with features and a powerful gasoline engine, helping Honda sales grow 21.6% through the first 11 months of 2015, according to WardsAuto data. Car sales by No.1 Maruti Suzuki and No.2 Hyundai rose 10.8% and 5.2%, respectively, during the same period.

Luxury automakers Audi, BMW and Mercedes-Benz offer models priced as low as Rs2.5 million ($38,000), but only Mercedes is focusing on A- and B-segment cars with features and enhancements – and comparatively low prices – meant to appeal to younger buyers.

“The response to these two products justifies our decision and underlines the maturity of India’s younger generation,” says Boris Fitz, vice president-sales and networks development for Mercedes-Benz, who was tasked with launching the models in India. “They offer the ride quality of a sedan, the utility of an SUV and the versatility of a multipurpose vehicle.”