Media is responsible for most of the friction while buying an automobile

22 October 2018 3 min. read
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Despite India’s emergence as one of the leading automobile markets across the globe, there remains a great deal of ‘friction’ in the vehicle purchasing process, which causes a large number of buyers to withdraw from the decision to buy a vehicle, according to new analysis conducted collaboratively by KPMG and Facebook.

Given the size of its population and the increasing levels of prosperity among its middle class, India has long been predicted to emerge as one of the leading markets across the globe for the sale of automobiles. Figures from recent years suggest that this scenario is now manifesting itself.

In the Financial Year 2018, India’s automobile production stood at 29 million vehicles, which is only expected to skyrocket over the next few years. In 2022, the country is expected to produce approximately 60 million vehicles, the majority of which are expected to fall within the small vehicle category.

Friction in the automobile buyer's journey

Over the same period, India will reportedly constitute 30% of the global market for small car sales. It comes as no surprise, therefore, that a growing number of automobile and original equipment manufacturers (OEMs) are rapidly gravitating towards the Indian market, particularly as the vehicle penetration levels still remain at only 20 vehicles per 1,000 people. 

Growth in the automobile sector brings with it rapid growth in a number of supplementary industries, particularly that of automobile-based services. These include the rental car industry, taxi services, which the report from KPMG and Facebook argues are “shifting consumers’ perception of automobile from an asset to a service.”

Another sector that evolves in tandem with the automobile sector is that of media and advertising, which is currently among the most rapidly developing industries in India. The report argues that the timing and quality of exposure to targeted media initiatives can play a crucial role in the decision making process.

Media friction for four-wheelers

In fact, media represents the biggest contributor to what is termed as ‘friction’ in the automobile purchasing process. One of the biggest obstacles to growth in the automobile sector is the tendency of consumers to drop out in the middle of the whole purchasing process, which takes up to a year on average.

The drawn out nature of the process and the substantial monetary investment required puts enough pressure on consumers, at which point it is crucial for media initiatives to intervene and help convince the buyer. Poorly managed media initiatives, on the other hand, are quite often the reason for a consumer dropping out.

As per the report, the media accounts for one-third of the friction prevalent in the four-wheeled automobile sector, this in turn accounts for 26% of “consumer drop-outs”. For two-wheeled automobiles, friction constitutes 34% of the reasons behind dropping out, nearly half of which is caused by the media.

Media friction for two-wheelers

The solution to this scenario, as per the report, is the intervention of mobile technology and its expanding role. India is set to have 850 million online users by 2025, which entails a broad increase in access to media initiatives. According to the report, mobile technology could reduce media related friction by as much 1.2% for four wheelers.

This figure increases to 1.6% when it comes to two wheelers. In absolute terms, this represents additional sale of 1 million units for four-wheelers and a staggering 2.6 million units for two-wheelers. By 2022, mobile technology will affect 80% of four-wheeler purchases and 70% of two-wheelers. Facebook, specifically, will affect half of all purchases in both categories over the same period

The report is based on responses obtained from a survey conducted amongst nearly 1,000 respondents in the Indian market. The survey itself was conducted by market research firm Nielsen, in collaboration with KPMG and Facebook.