“80% of retail sales happen through financing”: Shashank Srivastava, Maruti Suzuki India

A chat with the senior executive director (marketing and sales), Maruti Suzuki India about the financing options to buy a car with.

Maruti Suzuki’s latest ad campaign is all about the money. With a series of unconventional setups, the automobile brand wants to showcase how easy it is for consumers to avail different financing options that make it possible to ultimately purchase the vehicle.

“Through this ad campaign, we wanted to convey to users how convenient it is to buy a car with the different financing options we have available. In our industry, 80 per cent of our retail sales happens through these financing options. It became inconvenient for the customers to constantly visit different bank branches, take quotes, find the person offering least interest, etc,” says Shashank Srivastava, Senior Executive Director (Marketing & Sales), Maruti Suzuki India, over a call.

Shashank Srivastava

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Though the ads are exaggerated and over the top, Srivastava tells us that the main focus of the ad is the ease and transparency of the process . In one of the TVCs, the customer is an astronaut who is literally on the moon, in the second TVC, the man has scaled the mount everest and in the third one, the customer has gone skydiving.

Normally, car advertisements feature glamorous shots of the shiny car as it speeds down a scenic highway, performing a stunt or two. However, in recent times Maruti Suzuki’s car ads seem to focus more on the other aspects of car ownership.

“This ad is not really a product ad. These financing options apply to any vehicle. We want to promote it because we want customers to have an easy and transparent way in which they can look for financing options for their vehicles. We are aiming at customer satisfaction and we want to earn advocacy and retention from there onwards.”

Srivastava elaborated about what he meant by transparency in financial operations. Maruti Suzuki has onboarded 16 financiers including State Bank of India, HDFC Bank, Mahindra Finance, IndusInd Bank, ICICI Bank, Cholamandalam Finance, Axis Bank, Bank of Baroda, Kotak Mahindra Prime, Sundaram Finance, AU Small Finance Bank, YES Bank, HDB Financial Services, Toyota Financial Services (India), Federal Bank and Karur Vysya Bank.

When a customer visits a dealer, he has the opportunity to interact with the different representatives from banks who are present. He or she also has the option to compare the interest rates that the different banks offer and select the financing option most suited for their needs.

As far as the consumers themselves go, Srivastava tells us that there are two types of car buyers - repeat buyers and replacement buyers. “People who have bought cars tend to be wary, especially when it comes to these financing options. The process has been far from convenient in the past. We also want to target the first time buyer who has absolutely no experience with taking financing to buy a car. First time buyers make up about 14 per cent of the total car buyers in the Indian market. They are a prime target for financing and they are able to afford the car if the financing options are made easily available to them.”

The COVID pandemic brought on increased adoption of digital medium for communication and services across all sectors. This was also the case for Maruti. Enquiries on the platform were at 3 per cent in 2016 and after COVID hit, that number went to 15-16 per cent (approx).

“It took us four years to reach 15 per cent adoption but it took us three months to reach 45 per cent digital adoption. This trend of digital adoption is not going to reverse if the pandemic recedes, but it’s going to accelerate” says Srivastava. He adds that online financing disbursement has also increased in the COVID pandemic. The company used to sanction around 20,000 cases a month pre-pandemic, but now that number has shot to around 37,000 - with around 1,000 disbursals happening in February alone.

It definitely appears as if things are returning to normalcy now, with most offices hesitantly reaching out to homebound employees, offering them the option to return to and work out of an office setup - after a gap of nearly two whole years. Will this affect the automobile industry? It likely will.

Srivastava explains that during COVID - most users actively moved away from public transport and shared mobility (with ride hailing apps like Ola and Uber) thanks to concerns about safety and sanitisation.

“This pushed the trend of first time auto buyers coming into the segment. This was also the time we saw replacement car buying come down, since people were reluctant to upgrade their cars. Many felt this was not the right time to sell off their old car and buy a bigger car. Replacement buying is mostly aspirational whereas buying patterns during covid adhered more to conditional functionality.”

But he mentions another interesting trend that he noticed. Car buying became more utility focussed than aspiration focussed; which meant replacement car buyers came down and first time buyers and additional car buyers increased. However, this was not indicative of the car’s usage going up.

“People were using their cars less, but they wanted to have the option of using a car. People who could not afford even an entry level car - they were opting for used cars and this really pushed up the demand for used cars,” he explains.

However, there was also a shortage in the supply of used cars since people were more reluctant to sell the cars that they already owned. “There was an increase in demand but a decrease in transactions. When people go to offices again, I believe that replacement buying would go up again. It’s showing signs of inching back to normal. Before COVID, replacement buying rate was at around 26 per cent. During COVID, it came down to 17 per cent but now it’s back to 19 and a half percent - so things are slowly but surely going back to normal,” he says.

He adds that one thing that he learnt as a marketer in the pandemic is how to keep up with the different waves of the pandemic. He recalls that during the first wave, when factories were shut, the car production rates went to zero during the first lockdown.

“After the first wave, it took us 90 days to go back to making 6000 cars a day. However during the second wave, we hit 6000 cars per day again in just 18 days. the third wave did not impact as much both on the demand side as well as on the supply side. And I think going forward, I would expect further robustness in terms of demand and supply of goods and services,” he signs off.