Indian Consumer Prioritises Vehicle Experience Over Cost: Deloitte 2023 Study

Deloitte’s 2023 Global Automotive Consumer Study (GACS) indicates that in India, despite the fears of inflation, consumers are opting to pay a premium for purchasing their next vehicle. Vehicle intenders in the price bracket Rs 10 to 25 lakh were around 47 per cent. For Rs 10 lakh and below these were 28 per cent. About 57 per cent of intenders were willing to purchase Electric Vehicles (EVs) from Rs 10 to 25 lakhs and 20 per cent in the range of Rs 10 lakhs and below.

There is a clear shift in an Indian consumer’s buying pattern, where an average consumer is a prioritising experience over cost. Traditionally, the Indian consumer has been cost conscious and cost vs. mileage was the most important parameter for vehicle purchase. The average consumers have defined key factors, such as product quality (62 per cent), vehicle features (48 per cent), and brand image (46 per cent) when moving from one brand to the other.

For a better experience and preferred choice of vehicle, around 55 per cent of consumers were willing to accept a longer delivery time (up to 4–12 weeks). This opens the door to a more ‘build to order’ retail paradigm.

With favourable policies on climate change and self-reliance, consumer interest in EVs is growing as they look to lower their operating costs. The top three reasons for purchasing an EV included ‘low fuel costs’, ‘better driving experience’, and ‘less maintenance’. However, the availability of charging infrastructure, concerns regarding battery safety, and the price premium required to access EV technology are the challenges that remain.

Speaking on the study, Rajeev Singh, Partner and Automotive Sector leader, Deloitte Touche Tohmatsu India LLP said “Our consumer study indicates the rising demand and expectation of the Indian consumer, who is not just cost-conscious anymore but is considering more than one pragmatic way of mobility experience. This allows them to balance operating costs, and experience through technology (37 per cent) whilst making sustainable choices. As India sets newer trends, the need of the hour will be for Original Equipment Manufacturers (OEMs) and ecosystem stakeholders to work in cohesion and bring innovative business models that bridge the gap of infrastructural challenges with the power of digital technology.”

Half of the surveyed consumers (49 per cent) prefer to pay for the connected vehicle features and technology upfront as part of the purchase price. OEMs are looking to offer in-house insurance products, signaling a significant disruption for the traditional value chain. About 82 per cent of consumers were interested in purchasing insurance directly from the manufacturer citing ‘convenience’ and ‘cost saving’ over the current provider. Consumers have shown their trust in their servicing dealer (36 per cent) and the manufacturer (32 per cent), signaling the importance of these stakeholders in the customer relationship.

Safety is a key priority for India. Across all age groups, consumers prefer to pay for public EV charging via payment apps on their smartphones, signalling the need for easy-to-use digital payment tools.