The more you find out about the Indian car market, the more interesting it gets. I'm at the launch of the new Suzuki Alto, and I’ve just been chatting to K.D. Singh, corporate communications boss for Maruti, and a supremely knowledgeable authority on the way Indians buy cars.
“There are so many different strata of the demographic here that you can’t talk about typical buyers,” Singh explains, “there’s the top 14 per cent of the market – those that have benefited from the country’s economic boom – who have formed our customer base,” he goes on “and then the next five per cent, which we’re targeting now.”
This second tier is made up of households with an income between 200,000 and 500,000 rupees (£2400- £6000) a year, and in the next five years 20 per cent of Indian households will fall into it.
My next question is why there are still so many Marutis, Mahindras and Ambassadors still on the streets. According to Singh, it’s because you have to pay 107 per cent tax on imported cars – “so you have to be seriously well-off even to drive some Hondas.”
At the same time the tax on indigenous cars is falling, dropping from 40 per cent to just 12 per cent on small cars like the new Maruti A-Star.
With protectionist measures in place, it’s tempting to assume that Indians would jump at the chance to buy western-made goods if only they were available at the right price. But just as you can’t afford to underestimate the power of the aspiring Indian middle class, so it’s perilous to misjudge his discriminating side, says Singh.
“There’s a funny flipside to the way that some Europeans look down their noses at products made in India. Big brands like Nike, Peugeot-Citroen, Glaxo – they come here and expect Indians to flock to buy the same products that they sell elsewhere. And they fail.”
“You’ve got to ‘Indianise’ your strategy to do well here,” he says. “An Indian buyer might be a little nationalistic about what he spends his money on, but not because he doesn’t like imported products on principal; it’s because he knows what works for him.”
“That’s why Land Rovers won’t sell here, even if they’re assembled locally, until Land Rover develops an Indian car. I’d say 75 per cent of the population here don’t know about the brand at all, the other 25 per cent remain to be convinced.”
Which should give Tata plenty of food for thought.