How do you see the Auto sector evolving in next 5 years:

The Automobiles industry is going to evolve in various aspects in the coming

years:
There are primarily 4 heads under which the shift is expected:
1. First would be, Shifting of consumer preference from A segment to B segment. (In
CG we have seen a shifting of 17 % industry from A segment to B segment)
2. Secondly, Change in Consumer preference in terms of Fuel (usage of diesel, E20
compliant vehicles and EV)
3. In terms of Government policies we are expecting a lot of changes (regarding
scrappage, emission norms and other regulatory aspects)
4. And last would be, Customer buying behaviour and digitization of consumer
touchpoints.

 To elaborate further on the changing consumer preference from A segment

to B segment)
I did a segment-wise analysis of Market share of Chhattisgarh, from 2017 to 2021 we
have seen a drop of (17 %) in A Segment’s contribution to overall retail. B segment has
grown (18 %) in last 4 years. This is visible in the number of launches we have seen in the
last FY. Recently, a lot of successful new car launches in B segment (like Tata Punch, XUV
700 etc.) while there were very few launches in A segment

 Coming to the changes in Consumer preference in terms of Fuel

I believe, the biggest influencer would be EVs. New car, pre-owned car, public transport,
the whole industry will be impacted by the introduction of EVs. Currently, the biggest
challenge is the battery cost (i.e. cost of ownership of vehicle) and the charging
infrastructure available to us. EVs will become a viable option for all section of the
society when the cost of ownership is matched with IC engine and the charging
infrastructure reaches the remote parts of the country.

 Government policies
As per the Scrappage policy; Commercial vehicles aged >15 years and passenger vehicles
aged >20 years will have to be mandatorily scrapped if they do not pass the fitness and
emission tests. This policy will help us reduce pollution, phase out old cars and stimulate
car sales. Customer will also be benefitted by the policy:

o Zero registration fee for new vehicle purchase

o Owners can receive scrap value equivalent of 4–6% of ex-showroom price
of new vehicles
 o States can give up to 25% and 15% rebate on road tax for personal and
commercial vehicles, respectively
o OEMs are allowed to give 5% discount for buying new vehicles

 Coming to customer preferences in terms of the buying journey

Customers are moving towards digital platforms for all the pre-sales, sales and post sales
interaction. As mentioned in one of the Articles by McKinsey consulting, Google search trends
suggest 60 percent of car buyers under the age of 45 are likely to purchase their next car online
and are interested in contactless sales and services
MSIL is also moving in the same direction; we have already digitised 24 out of 26 touchpoints of
the customers buying journey.
Supporting
IBEF.Org

Scrappage policy (launched on August 13, 2021)

scrappage centres by large OEMS:

 CERO by Mahindra & Mahindra (2018)

 Maruti Suzuki Toyotsu by Maruti Suzuki and Toyota (2019

commercial vehicles aged >15 years and passenger vehicles aged >20 years will have to be
mandatorily scrapped if they do not pass the fitness and emission tests. The policy does not
treat a vehicle as scrap just because of its age, but considers other factors such as quality of
brakes, engine performance and others

objective

 to phase out old cars

 reduce urban pollution levels
 stimulate automotive sales,

Some incentives for scrapping old vehicles and buying new ones are as follows:

 Manufacturers can give up to 5% discount for buying new vehicles

 Zero registration fee for new vehicle purchase
 Owners can receive scrap value equivalent of 4–6% of ex-showroom price of new vehicles
 States can give up to 25% and 15% rebate on road tax for personal and commercial vehicles,
respectively

https://www.campaignindia.in/article/we-cant-depend-completely-on-government-subsidies-in-the-
ev-space-shashank-sriv/474204

The consumer buying behaviour has changed in terms of the process he/she uses. The starting point
(for any car purchase), is the enquiries front. In 2016-17, online contributed to around 2-3% of our
total enquiries. By 2019, it was at about 15-16%.

We are looking at change in consumer preference in terms of autonomous vehicles (self driving
cars), electric vehicles as well as subscription based services.

A few new entrants/Companies (like Mercedez Benz) are working on D2C models as well to reduce
costs.

Of the total sales process, there are 26 touchpoints, starting from the time a consumer thinks of
buying a car, to the delivery of the car. Maruti Suzuki has digitised 24 of them. Except for the test
drive and the delivery of the vehicle, we are offering solutions on digital.

1. Searches the car on Google;

2. Asks peers;
3. And/or asks on social media;
4. And/or checks on WhatsApp groups;
5. Visits OEM website;
6. Checks the brand’s social media pages;
7. Views product photos;
8. Gets influenced by online ads;
9. Browses print media ads;
10. Watches YouTube videos of the car;
11. Watches video ads of the car;
12. Searches on smartphone;
13. Uses loan calculator on third-party website;
14. Sees TV ads;
15. And/or sees OTT ads;
16. Reads professional reviews;
17. Locates a dealer on smartphone;
18. Visits dealer website;
19. Requests a price quote online;
20. Uses car-comparison tool;
21. Visits automotive expert websites;
22. Reads consumer reviews;
23. Takes a test drive (physical activity);
24. And/or uses AR/VR tools;
25. May or may not visit dealership;
26. Takes car delivery or home delivery of the car (physical activity)

Electric Vehicle

We also need to look at the battery cost so that the consumers can have a lower cost of acquisition.
It’s still in that stage, although we have announced that Maruti Suzuki will bring out an electric car
before 2025.

Cost of Acquisition

charging infrastructure

Dependence on Government subsidies in maintaining reasonable cost of acquisition

Personal mobility vs Public transport