According to a study conducted by auto consultancy firm JD Power, while more customers report receiving cash discounts, fewer customers are taking loans to purchase their cars.
The study found that the percentage of customers who took a loan to finance their new vehicle decreased to approximately 80% in 2007 from nearly 90% in 2006. ?Increasing interest rates in the Indian market and differing manufacturer retail policies may partially explain this decrease in new-vehicle buyers seeking loans,? JD Power Asia Pacific Senior Director Mohit Arora said. ?While regional differences exist, we see a greater propensity among customers to purchase vehicles in cash, particularly in the small car segment,? he added.
The study found that overall satisfaction in the industry remained static in 2007, recording a single-point increase over 2006. ?Six of the nine nameplates ranked in the study record improvements compared to 2006, with Ford and Toyota posting the highest improvement since 2006,? the study said.
JD Power found 60% of customers receiving a cash discount in 2007 and listed extended warranty as one of the most attractive factors for new buyers. ?Satisfaction is highest when an extended warranty is combined with a cash discount. That falls marginally when an extended warranty is combined with free accessories in lieu of a cash discount,? the study said.
Extended warranty was not only beneficial to the customer but also helped the automaker ensure that the customer was retained within the network for post-warranty service. ?Given the fact that the average consumer replacement cycle is approximately five years in India, provision of extended warranty is not only a source of additional service revenue, but also helps the dealership to influence the customer?s next vehicle purchase,? Arora pointed out.
The study found that customers who got their financing from nationalised banks reported greater satisfaction with the entire experience, compared with those from multi-national banks and other sources.