Base variants of cars no more in vogue

Indian buyers may be value conscious, but that does not mean they go for the cheapest offer on the table. In an interesting trend, around 50-70% of the car buyers today are opting for the more feature-packed middle and top-end variants, rather than the cheapest base variant.

While already true in luxury cars, this trend is noticeable even across the mass segments — starting from compact hatches such as the Maruti Suzuki Alto, its elder brother Swift, to sedans such as the Hyundai Verna and Chevrolet Cruze. Such a shift in consumer preference has been attributed to rapidly growing aspiration levels among the young that have made many luxury bits of yesteryear, such as air-conditioning and power steering, a standard requirement today.

From half, about two-thirds of Maruti Alto buyers today choose the top variant with AC and power steering. In the Swift, the demand for the middle and top variants account for 70% of sales, up from about half three to four years ago.

Maruti Suzuki's vice-president for marketing Manohar Bhatt said, "When you translate to EMIs (for cars bought through vehicle loans), there is not much difference for a customer. For a higher variant with a R20,000-40,000 higher sticker price, he has to pay extra instalments for just a few more months," he said.

Easy availability of financing and an increased acceptance to buy cars on loan over cash-down purchases is probably the key driving factor in the rising popularity of models with more features. For Maruti, around 76% of cars are purchased on finance, versus 60-70% range for a more premium carmaker such as Honda.

General Motors (GM) and Honda both said that the middle variant has the highest demand because of the perfect value-for-money proposition. "Aspirations have gone up and lifestyles have changed, so customers want more facilities. In both the Beat and Cruze, about 60% of sales is from the middle and top variants. People are also going for premium hatches versus minicars," GM India vice-president P Balendran said.

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