Driving Through the Consumer's Mind, Deloitte's Auto Sector Report

Deloitte in India, recently released a report titled ‘Driving through the consumer’s mind: Steps in the buying process’, which sheds light on the process Indian car buyers go through when buying a vehicle. It elaborates on the information buyers look for, before making a purchase the time they spend researching, their choice of information sources, interactions with dealers and their openness to recommend products to others.

According to the report, social media and dealerships are the least important information sources for potential car buyers; word-of-mouth and car reviews are bigger influencers in the purchase process. Price / value and features of a vehicle are key research parameters in the purchase process. While test drives remain a highly important aspect of the customers’ research, a majority of them do not prefer spending more than 45 minutes at the dealership, including the time on test drives. The report also reveals that people recommend cars to potential customers regardless of whether they own it themselves or not; implying that manufacturers need to continuously engage with customers beyond sale of vehicles to create a positive buyer-seller relationship.

According to Mr. Kumar Kandaswami, Senior Director - Deloitte Touche Tohmatsu India Private Limited, “In this report, we have tried to draw insights on factors that manufacturers need to consider in order to reach out to the potential customers in the most efficient way, at the most appropriate time with the most relevant information. The report delves deep into consumer behaviour patterns and analyses their information consumption patterns when it comes to buying a vehicle and influencers that create purchase triggers for these car buyers.”

Purchase Triggers: There are several factors which influence the decision of buying a car by a customer.

o    For first time car buyers, family needs is rated as the top trigger in purchase decision and is 8 times more important as a trigger than better brand image

o    However, in case of repeat buyers, technology and need for more space are rated as the top triggers in purchase decision of a car, and are 3 times more important as a trigger than better brand image

This depicts that consumers have a rational approach to buying cars and they consider utility and value for money to be highly important. This was an important conclusion of an earlier report of this series.

Information Search: Having made the decision to make a purchase, this report covers the nature of information the buyer seeks to collect to come to a decision on the final purchase

o    While social media strategy is high up in the priority list for manufacturers, the customers seem to attach the least importance to what they get out of the social networking sites

o    50% of car buyers, across age, gender and location, spend more than 10 hours researching about possible vehicles they can buy;

§  Male buyers tend to spend more time compared to female buyers

o    More than 50% of people considering 3 or lesser brands for purchase do not research for even a single car brand. This would seem to suggest that these groups of buyers are reasonably clear about what they are considering and also have information on those brand options

Interactions at Dealerships: While buyers don’t reach out to the manufacturers or dealers for information through their websites, they tend to visit dealerships to validate their findings from the research

o    More than 70% of buyers visiting dealerships take a test drive, indicating that test drive is a key activity in the dealerships to facilitate the decision making

o    More than 50% customers desire to spend less than 45 minutes for dealership visit and test drive. It indicates that bulk of the information gathering is done outside the dealerships

Customer Endorsement: Customers seem to recommend products as they go through or complete their buying process. They seem to recommend products that they did not buy for themselves too. This highlights the importance of lost customers – both from their enthusiasm to endorse products and given the importance of word-of-mouth in the buying process

o    More than 50% of respondents who consider 4 or more brands recommend at least 1 brand; and more than 40% of respondents considering 3 brands recommend at least 1 brand to others which is different from the brand that they own