From Tata Harrier to Honda City, more car buyers opting for high-end models

One dealer said that the fact of experiencing the look, feel, and handling of the top model was clearly a factor in the final choice

A month ago, when Mumbai-based Kunal Patil, 39, was looking to upgrade from his five-year-old Wagon R to an SUV (sports utility vehicle), he was very clear that no matter which brand he chose, he wanted to go for the top-end trim in the line-ups he had seen in showrooms. 

A fortnight ago, he took the plunge, booking the XZ variant of Tata Motors’ new Harrier. “I did not want to compromise in any way, be it safety or creature comforts. I was anyways getting it financed so I didn’t mind stretching the budget,” said Patil, a media firm executive.

Buyers like Patil are building on a trend towards buying the most premium variant of car models. This began a couple of years ago and is now firmly established. These are customers who want the works: Every safety feature, every little accessory, and every bell and whistle going.

The fact that such variants can carry an average mark-up of up to Rs 1.5 lakh as compared with entry and mid-trim variants does not deter them.    

For SUVs, the percentage of top-end trims being sold can be as high as 70 per cent of total sales, said dealers and officials at various automobile companies. This is a reversal in the trend seen four to five years ago when entry-level variants of  known brands constituted 70 per cent of a company’s sales.

Typically, and for obvious reasons, it’s the premium version that is rolled out for customers when they visit a showroom and take it out for a test drive. One dealer said the fact of experiencing the look, feel, and handling of the top model was clearly a factor in the final choice. Any residual doubts are soon extinguished by the easy availability of finance.

S N Barman, vice-president of sales and marketing at Tata Motors, said what has also worked for the Tata group flagship is the changing buyer profile. “Unlike a few years ago, buyers of Tata cars are a lot younger now,” he said.  

Young buyers value a good infotainment system, day running lamps, alloy wheels, premium upholstery, and high- end safety features. Close to 70-75 per cent of bookings for the Harrier are accounted for by the top two variants — the XZ and XT. Barman expects it to come down to 60 per cent once the model is settled in its segment and gets older in the life-cycle. 

When a new model goes on sale, it’s the initial set of buyers, referred to as the “innovators” in marketing parlance, who drive the trend, said Rajesh Goel, senior vice-president of sales and marketing at Honda Cars. “They are risk takers, seek changes and are the first to buy a new product. The early adopters look up to the innovators,” said Goel.  

Honda is set to launch the Civic Sedan next week. Nine out of every ten buyers have booked the top end of the model,without even seeing or test driving the car. Goel expects this figure to stabilise at around 50-60 per cent after a few months.

Even for the Honda City, which has been around for some time, the top end models, the ZX and the VX, constitute almost half of Honda’s sales. “This is a good indicator of the trend and brand’s resilience,” said Goel. “Given the low demand for entry level variants - less than 10 per cent - Honda has been considering discontinuing them and has already done it for some models.”  

But the trend is not without some anomalies. Take Hyundai Motor India’s Creta. The demand for the entry level trim is almost equivalent to the top variants, said Puneet Anand, marketing head at Hyundai. He attributes it to the price positioning of the Verna. 

“One can buy the entry level Creta at the price of a top end Verna. This appeals to those looking to graduate from a sedan to an SUV,” he said. For the company’s other models, though, Anand said the trend has been in line with the market.

No Maruti official was available for a comment but a Mumbai-based dealer of the company said that the new generation Ertiga, launched two months ago, has seen 70 per cent of the bookings coming for the top end. For smaller cars too, such as the Alto and Celerio, 40 per cent of sales are of the top trims while the mid-level variants account for the remainder.

In India, seven out of every ten passenger vehicles are bought on credit. “The biggest driver of this trend has been attractive finance schemes,” said Puneet Gupta, associate director, IHS Markit, a sales forecast and market research firm. 

Gupta said this has pulled a new set of buyers into the showrooms and fuelled aspirations to own the best. “Social media is also wielding influence on buying behaviour,” he added.