Cars

The Indian auto industry is by far the largest growing one in the world.
With
exponential growth over the last 3 decades, it has played a large role in the country’s
economic growth.
India has overtaken Japan as the third largest light vehicle market in the world in
2022, led by a strong bounce back in demand for personal mobility and last-mile
deliveries, post pandemic.
Though the final sales numbers for domestic passenger vehicle sales are yet to be
announced, India is ahead of Japan, grabbing a podium for the first time. India
closed 2022 with annual sales of 3.8 million units, growing more than 25 percent
over Japan, which is understood to have posted a decline in sales by almost 2
lakh units from 2021's volumes of 3.7 million units.
Here, we will discuss at least 5 demand determinants and also which demand
determinants will have highest weightage.
The below equation expresses the relationship between demand and its five
determinants:
qD = f (price, income, prices of related goods, tastes, expectations)1
Price
One of the most important determinants while buying a car. The continually
increasing fuel price has been a matter of concern for budget-friendly buyers.
Add to this the rising prices of new launches. A large segment of the car-
buying public looks for fuel efficiency and value before going for a new car.
When the car prices are higher and the running cost is also high, it acts as a
deterrent. Add to it the fact that maintenance cost to be keep in mind and you
have a solid reason why price-conscious. So , Price plays the important
factors in buying a new car.
Changing Policies and Change in Government

Automotive policies directly impact car buyers’ factors. At present, in addition
to standard questions on loan interest, GST rates, price control, monsoon
prediction, etc. Implementation of the latest safety regulations has started in
April this year in phases. All cars available for sale now are required to have
ABS, seat belt warnings, speed warnings, reverse parking sensors by July
2019. New cars also have to face Bharat NCAP crash test safety principles by
October this year and BS-IV emission norms by July 2020. That’s why most
car manufacturers are either busy renovating their products or planning
numerous launches meeting all standards. This has also played a role in
potential buyers postponing their purchase decisions, waiting for brand new
models.
Soaring Insurance costs
According to the modified automobile insurance norms from September 2018,

a compulsory three-year third-party insurance cover for new cars is to be
furnished by all general insurance companies. As a result, with escalated on-
road car prices, buyers are rethinking whether to buy which dream car.
Environment Consciousness Lessening Demand for Diesel Cars
The green awareness leading to the implementation of fresh BS-VI emission

regulations has affected the economic viability of diesel negatively. Also, many
markets in the country have minimized diesel vehicle registration as compared
to their petrol counterparts. And a comparison of car and fuel price has led
prospective purchasers to think twice before buying.
Easier Availability of Reliable Pre-Owned Cars
Pre-Owned car dealers that offer reliable and certified pre-owned cars at a
fraction of the cost become more prevalent. Sometime buyers prefer to buy
similar or higher models at a lower cost and use the rest of the money either
as an investment for the future or for vacations and other leisure activities.
While more and more cars are being launched in the market, it’s imperative to
delve deeper into the reasons behind the decision to buy a car. After all,
there’s not much point in making new cars if fewer and fewer people are
actually buying them!
Quality
When buying a new vehicle, quality is also essential to consider. Factors like
mileage expectations and how long a car is expected to last come into play
when considering reliability.
Buyer will also need to consider the mileage of the vehicle they are
purchasing. Most modern cars have a good fuel economy, but they may not
be buying the most modern vehicle, If you’re only getting 12 KM per litre. They
might find that the cost of fuelling the vehicle might not be worth it for how
often you’re driving.
Features
Once Buyer has decided on the type of car, he/she will be buying, they want
to consider the must-have features as well. New vehicles come with an array
of add-ons and can range from heated or air-conditioned seats to built-in
wireless chargers in the centre console. While the bells and whistles are great,
it is essential to step back and think about what features will genuinely utilize
as a car buyer.
Safety features like headlights or windshield wipers that adapt to road

conditions can also be worthwhile. However, features like a heated steering
wheel may be unnecessary and not covered by your insurance or
manufacturer’s warranty down the line.
Resale Value
Another important factor to consider is how much you will be able to get out of
your vehicle when you eventually sell it, also known as the car’s resale value.
It’s safe to assume that the car you buy today will not be the last vehicle that
you ever own. Some people even make it a habit to purchase a new vehicle
every three or four years through leases or trade-ins, ensuring that they
always drive the latest and greatest model on the road.
Even if it is a new vehicle or an older car, many cars lose their value after two
years. But not all vehicles will lose their value at the same rate. For example,
the powerhouse brand Toyota boasts many vehicles that retain their value
much better than an average Ford or Chevrolet.

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The Indian auto industry is by far the largest growing one in the world.

qD = f (price, income, prices of related goods, tastes, expectations)1

Changing Policies and Change in Government

Soaring Insurance costs

According to the modified automobile insurance norms from September 2018,

Environment Consciousness Lessening Demand for Diesel Cars

The green awareness leading to the implementation of fresh BS-VI emission

Safety features like headlights or windshield wipers that adapt to road

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