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Which is preferred car brand of first time buyers

New Delhi: Due to COVID 19 impact, the overall percentage of first-time car buyers has increased significantly over the last few months. Now people prefer to choose personal transport over public transport because of virus fear   

"First-time car buying is up and replacement buying is down, which means exchange is down. However, additional car buying is also up because of the functionality requirement," Maruti Suzuki India Ltd Executive Director (Sales and Marketing) Shashank Srivastava said.

Explaining the reasons behind the development, he said, "That means people are preferring personal transport over public transport. At the same time, their income levels are also probably going to be suppressed for some time. Therefore, the trend is towards what we call 'telescoping of demand downwards', that is logical and intuitive. It is also reflecting in the data which we have so far."

Maruti had witnessed the share of first-time buyers going up by 5.5 percent to around 51-53 percent in the first quarter of this fiscal as compared to the fourth quarter of 2019-20. Similarly, companies like Hyundai also seen a surge in demand for small cars 

In July, sales of MSI's mini segment comprising Alto and S-Presso grew by 49.1 percent at 17,258 units as against 11,577 units in the same month last year but that of compact segment consisting of models like WagonR, Swift, Celerio, Ignis, Baleno, and Dzire was down 10.4 percent at 51,529 units as against 57,512 units in the year-ago month.

The company's overall domestic passenger vehicle sales in July grew by 1.3 per cent at 97,768 units as compared to 96,478 units in July 2019.

When asked if July sales data indicate recovery in the automobile market, Srivastava said, "There is relief and optimism based on July numbers...It does indicate restoration of normalcy in terms of production, supply chain and that is the defining characteristic of July (sales)."

"Going forward we have to carefully watch. Long-term demand will depend on the fundamentals of the economy. Also, it will depend on which way this 'Covid sentiment' moves, that is a very uncertain thing. We have to also closely watch the local lockdown because it does disrupt the momentum of retails at both the dealer end as well as the consumer end," he said.

On festive season outlook, he said, "Since it is a discretionary purchase it will depend a lot on how sentiments are. In festival times car buying generally increases because consumers have a bigger intention or inclination to spend money but sentiment this time is little unprecedented."

"While the festive season does bring in some positive sentiment every year, this year we have also to be careful about sentiments as regards the COVID-19 situation."

 So far clearly first-time buyers are choosing compact cars from manufacturers like Maruti and Hyundai,  also used car market also witnessed a surge in demand.