A strange trend is being seen in the Indian car market these days. People may use the features or not, but if any feature is not there in the car, then that model is immediately out of the shopping list. This is the reason why auto companies are now including those premium features in the base model, which were earlier seen only in the top variants. The question is whether this is a compulsion of the companies or a new marketing ploy?
The country’s car market has now become so competitive that if a car does not have any important or popular feature, its sales can be immediately affected. This is called absence penalty. Tata’s new Sierra SUV is a good example of this, whose base model also has features like sunroof, advanced connectivity and premium interior. Companies say that if a car is launched today without such features, customers immediately remove it from their shopping list.
Changing mentality of car buyers
Actually, the mentality of car buyers in India is changing rapidly. Customers may not use a feature more than 5%, but if that feature is not there, they do not even decide to buy the car. A big car dealer says that people may use ventilated seats twice a year, but if the car does not have ventilated seats, then they immediately throw out the model.
What does the data say?
According to data from Jato Dynamics, when 40% of cars in a segment start getting a feature, its absence in the remaining models leads to a decline of 18-22% in sales. That means customers do not choose cars, but leave those cars which have less features.
Dilemma of companies
Hyundai and Kia have been the biggest drivers of this trend. These companies increased the pressure on other players by adding premium features to the mid-range variants. The result is that if a competitor does not match the features, it gets dropped from the buyers’ shortlist. But on the other hand, it has also become a big dilemma for car companies. If features are added, the price increases and the margin decreases. At the same time, if features are not added then the risk of falling sales increases. This FOMO (Fear of Missing Out) i.e. fear of missing something has now become the new thinking of car buyers. For this reason, companies have to increase features in every new car. This is having a direct impact on their planning and strategy of launching new models.
Latest Business News