Indians dumping cars every 3 years

Till the nineties, Indian consumers kept their cars for life and even passed them on to the next generation. By 1998, fidelity levels had dropped to seven or eight years. Today, independent studies by car manufacturers show that car owners are dumping their cars for a new one every three years.

The prime reasons for this change are a drop in the average age of the buyer, and the wider product options available to him.

"The average age of the buyer used to be 35-plus even five or six years ago. Today, the average age is 25-plus. Naturally, the consumer will want to upgrade to a better car as he grows older and moves up in life," said a Hyundai executive.

What is more, he has plenty to choose from. From just three manufacturers till the nineties, there are now 12 car-makers in India with 20-odd models, each of which has more than one variant.

"The availability of so many models prompts the consumer to think of an upgradation as early as possible," said a spokesman from the Society of Indian Automobile Manufacturers.

In response to this change in buyer behaviour, car manufacturers, too, have reduced their product life-cycles -- model upgradation is now taking place every year. For instance, where the Maruti 800 did not change substantially for nearly a decade, the Santro from Hyundai has upgraded three times in five years.

Easy and cheap finance schemes have played their role too. Most cars today are brought through finance schemes, which are usually for three years and at interest rates that are almost half their 1998 levels.

Research by General Motors India has shown that consumers are keen to upgrade to a higher segment once they have repaid their debt. "A Maruti 800 owner then looks for a B segment Zen or Santro or a C-segment Opel Corsa, Hyundai Accent, Maruti Esteem and so on. He is also likely to go for another finance scheme," an executive from General Motors India said.

The development of a structured second-hand market has also helped car owners sell their old cars more easily. Used car dealers have mushroomed and their services have become increasingly efficient. "Such hassle-free services have helped consumers take decisions faster," said an executive in Maruti TruValue, a company Maruti has floated for the rapidly growing used-car business.