Indians shedding ‘cost-conscious’ tag as comfort & styling features drive demand for premium cars

Top variants account for over 40% of total sales of any given car in India, suggesting that Indian buyers have begun prioritising 'experience over cost'.

For Kia Motors, top variant accounts for 82% of Carnival sales | By special arrangement

New Delhi: India is gradually leaving behind its “cost-conscious tag” with over 40 per cent sales for any given car — in some cases going up to 80 per cent — coming from the top variants. This shift is driven by the rise in disposable incomes, the need to stand out from the crowd, aspiration for high-end features, and easy financing options.

“The demand for top variants has been on the rise over the past few years, with consumers willing to pay an additional price for enhanced features available in the high-end variants. As per our channel check, the percentage of top variants in vehicle sales has increased to levels of 40-50 per cent across models; the proportion could even be higher in select high-selling models,” Rohan Kanwar Gupta, vice president and sector head (Corporate Ratings) at credit rating agency ICRA Limited, told ThePrint. 

According to country’s largest car maker, Maruti Suzuki, the contribution of top variants to sales of the entire passenger vehicles segment is currently as high as 67 per cent.

“In Maruti Suzuki, on average we have 4-5 variants of each model. For top variants, we consider the top two. In competition, there are models which have a huge number of variants — going up to 30 in some cases. There, we take the top 3-4. Given that definition, for Maruti Suzuki, the top variant (contribution in) percentage of sales has gone up from 25 per cent five years back to 33 per cent now,” said Shashank Srivastava, senior executive officer (Marketing & Sales), Maruti Suzuki India Limited.

He added that for the overall industry, this number was about 67 per cent in 2018-19 and 62 per cent in 2020-21. It is now on track to reach 67.7 per cent this year.

Srivastava added that for the hatchback segment which includes cars such as Baleno, Swift, i20 and Altroz, the share of top variants in sales has increased from 60 per cent to 67 per cent in five years and for sedans (such as Verna, City), it has grown to 77 per cent.

However, in the SUV segment, this percentage has dipped to 65 per cent from 74 per cent.

The decline in the SUV segment was largely due to a fall in demand for top variants in the entry-level SUV (such as Brezza, Venue and Nexon) segment to 55 per cent from 81 per cent in five years, he said, adding that in the case of the mid-level SUV segment (which includes Grand Vitara, Creta and Seltos), the percentage contribution of top variants has gone up to 77 per cent from 65 per cent in the same period.

“This is because sometimes, the category of the buyer itself changes. For example, because of the price overlap, buyers looking at premium hatchbacks may go for a compact SUV. And in that case, may not choose a top variant,” said Srivastava.

He added, “The wider trend is that people are preferring top variants. If you look segment-wise, the demand for top variants has increased, except the entry-level SUV, which is the largest segment of the industry, contributing about 23 per cent. Therefore, a drop in demand for top variants in this largest segment has a large bearing on the final figure.”

For homegrown auto major Tata Motors, 55-60 per cent of passenger vehicle sales come from the top variants. “The demand for our top variants across models has been growing year-on-year. For the current year, we have seen a growth of over 30 per cent compared to the last year. Almost 55-60 per cent of our passenger vehicle sales are from the top variants across brands, depending on the model,” said Shailesh Chandra, MD, Tata Motors Passenger Vehicles Ltd. & Tata Passenger Electric Mobility Ltd.

He added that this trend is being seen across almost all of Tata Motors’ brands.

“Customers are more educated about the features available in different models and variants and do the product comparison in advance. First-time buyers are getting younger and have a higher purchasing power to opt for higher trims offering the best value proposition for them,” Chandra said when asked about the factors driving this trend.

‘Prioritising experience over cost’

Myung-sik Sohn, chief sales and business officer at Kia India, said his assessment is that Indian consumers are now prioritising experience over cost and the country is leaving behind its tag of being cost-conscious. 

“India is a value-conscious market, and they seek a return on even their smallest spending. However, a recent study says Indian consumers have started prioritising experience over cost. So essentially, India is leaving behind its cost-conscious tag gradually. We observed this pattern when we began conducting our research in India and designed our products according to the need gaps of the Indian market,” Sohn said.

Kia India has seen a strong demand for top variants of its cars and in 2022 alone, they contributed almost 54 per cent to its overall sales. This rising trend, Sohn said, is also reflected across the company’s product portfolio. While for Seltos, 57 per cent sales come from the top variant, this number is 58 per cent for Sonet, 41 per cent for Carens and 82 per cent for Carnival.

Additional features related to safety, comfort and exterior looks is what is attracting buyers to loosen their purse strings and opt for top variants.

“The high demand for premium cars was not always the case. There has been a growing need for that and you see that across products, including in the luxury car segment. We are seeing a trend in favour of the top variants of vehicles as people are looking to stand out from the crowd. They are looking for comfort, safety and styling features,” said Ashim Sharma, senior partner and group head (Business Performance Improvement) at research and consulting firm NRI Consulting & Solutions India. 

He added that more advanced safety features being offered in top variants — such as additional airbags and futuristic features such as ADAS (advanced driver-assistance systems) and capabilities such as automatic emergency braking, driver drowsiness detection and parking assist — are a big demand driver for top variants.

Other premium ‘comfort’ features available in top variants include electrically-adjustable seats, paddle shifter, ventilated seats, LED lamps, auto temperature control, infotainment system, connected features, wireless chargers and leather trims, among others, which, according to Sharma, make the “vehicle more luxurious and comfortable when the owner is sitting inside”.

There is also an outer visibility perspective that drives the demand for top variants such as dual tone roofs and alloy wheels. “These differentiate the car… that this is a more exclusive car and not just one of the models of the car,” Sharma explained.

(Edited by Smriti Sinha)