Revving up auto sales – finding new sources of value
Car purchases have always been high involvement purchases, largely driven by functional factors like engine power, driveability and mileage. Though still important, these factors have today taken a back seat to ‘in vehicle’ and overall ‘ownership’ experience. Features and functionality behind the actual driving performance have become hygiene factors as all brands have upped their game in terms of quality and technology. The differentiation lies in finding the sweet spot of exciting experience coupled with convenience.
Value for money is no longer driven by mileage but by the style quotient and number of digital features packed inside the car at a given price. Brands which can find ways of adding value while optimising cost of purchase and ownership can win the game. How the car drives is important for sure, but how it makes me feel is considerably more important for customers today be they in the economy, mid or premium segment.
The sweet spot for auto customers is increasingly driven by thrill and/or convenience. Getting the right insight into what the consumer finds exciting is critical. Even a small design feature can create immense value, case in point being the sun roof. A feature earlier offered only in luxury cars and with limited functionality given the Indian weather, became a huge driver of sales when it was introduced in premium and mid segment cars. It was the thrill of owning this aspirational feature which made consumers choose certain brands/models over others even paying a premium for the same. Today, one in every four cars sold in India comes with a sun roof. Earlier this year, it was reported that 40% to 95% sales for brands like Creta, Maruti Suzuki Grand Vitara, Tata Altroz, Hyundai Verna and its micro-SUV Exeter were attributed to models with the sun roof feature.
Tata Nexon became a top selling SUV riding on its high-end styling and feature packed models including floating touchscreen infotainment system, auto dimming IVRM, wireless charging, voice-assisted electric sunroof and ventilated seats along with a 5-star Global NCAP safety rating. Many of these with the exception of safety, had little to do with the actual driving performance but it did change the customer experience inside the car. Offered in a wide range of options across petrol, diesel and electric versions, the compact SUV became a hit with buyers delivering performance plus exciting features at competitive price points.
MG Hector, a surprise bestseller in the already crowded Indian SUV market, carved its niche due to the exceptional in-vehicle experience which made customers disregard its less than optimum mileage. Hector's internet connectivity features enabled users to connect their car with a smartphone and control the vehicle features with voice commands. Simple insights like personalisation long used in the service industry were brought in to make the car more ‘human’. Greeting the owner by name and wishing them a happy birthday may not impact the driving experience but it did create customer delight. In fact, Hector’s communication campaign “It’s a human thing” was based on this insight.
Another more recent success from the JSW MG stable is the crossover utility vehicle, Windsor which recorded the highest sales in October 2024 among all passenger electric cars. While driving performance is definitely good, the kicker comes from two key aspects of experience – excitement and convenience. The Windsor offers iSmart connectivity technology with over 80 connected features offering integrated navigation, entertainment, and smart systems, with a huge Grandview Touch Display creating an intuitive user experience. A key sales enabler and success factor building on the convenience aspect is the industry first offer of battery as a service, giving customers the option to purchase the car sans the battery, lowering upfront costs and making the battery available at rental charges of Rs. 3.5 per kilometre.
Innovating to explore new ways of creating value is the name of the game today. The auto industry has leveraged the principles of related world bringing in learnings from the entertainment services to shift the car from a means of travel to a personal space for relaxation or work. The principle of revolution has been leveraged to bring in innovations in the way cars are made and sold. Removing the engine to create a battery powered EV, and then removing the battery from the car to offer it as a service best illustrates this point. Another example is that of subscription services for cars offering consumers the flexibility of variety while doing away with the hassles of car maintenance.
As industry boundaries blur, the definition of what constitutes the automobile industry is also evolving. Co-creation and collaboration will help brands identify and tap into new opportunities. The Mobility and Automobile Innovation Lab (MAIL) is a step in this direction by Maruti Suzuki, helping build next generation ideas in the areas of connected cars, shared mobility, autonomous cars, electric vehicle infrastructure etc.
Going forward, auto brands need to explore how customer experience can be enhanced both inside and outside the car. This includes not only exploring sources of value in the vehicle itself but also in the eco system around it, including road conditions, traffic challenges, charging infrastructure, driving styles, parking facilities etc. Highway assistance, car financing, pre owned car sales are areas which auto companies have already tapped into. But many other opportunities remain unexplored for instance access to verified drivers, managing the pricing challenge, facilitating multi modal travel, etc.
While technology will definitely play a key role in simplifying and enhancing the customer experience, it is important to have a deeper understanding of the customer and the context in which they use their vehicles before any technology can be deployed successfully. A design thinking approach combined with systems thinking to leverage linkages across multiple dimensions and players, can help auto manufacturers find new touch points and create new sources of value in the customer journey.
Prof. Ruppal Walia Sharma is Professor of Marketing and Head - Delhi Centre, SPJIMR. Views expressed are personal.
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