Honda car buyers are happiest, says JD Power

Honda Cars India has topped the latest India Sales Satisfaction Index Study which also reveals that buying a small car in India needs an average of 10 months’ income.

Between 2008 and 2012, little has changed for the small car buyer in India. Like it did then, 10 months is the average number of months of income required to buy a small car now. This information comes from the J D Power Asia Pacific 2012 India Sales Satisfaction Index (SSI) Study, whose findings were released last fortnight.

The Study is based on responses from 7,382 new-vehicle owners who purchased their vehicle between September 2011 and April 2012 and includes evaluations of more than 85 models. The study was fielded from March to July 2012.

Although the average income level and transaction price of vehicles have increased in India, the financial stretch made by the customers to own a small car remains unchanged. This is driven primarily by customer aspirations to own higher-priced small cars, the study reveals.

“Over the past several years, automakers in India have continuously strived to offer higher value to their customers, especially for highly competitive small cars,” says MohitArora, executive director at J D Power Asia Pacific, Singapore. “This has resulted in far greater choices for customers, who have thus shown a propensity to migrate toward the greatest value offering.”

According to Arora, an increase in average household income and consumer preferences for better styling and feature contenting have driven vehicle shoppers to buy higher-spec small cars, resulting in owners’ income stretch remaining unchanged.

The study also finds that high petrol prices are driving consumer interest in diesel vehicles, as 43 percent of consumers are purchasing a diesel car in 2012, up 11 percent from 2011. With increased demand come longer wait times for vehicle delivery, as customers indicate waiting 17 days, on average, for a diesel vehicle, nearly double the wait time in 2011.

“Communicating delivery time of the vehicle accurately and promptly is an important element of managing customer expectations,” says Arora. “Although delivery times have increased for several diesel models in 2012 due to external constraints, dealerships are able to more effectively manage expectations through proactive communication. This, in turn, helps automakers largely keep their customers satisfied with the overall sales experience, even though several disruptions happened in supply chain last year.”

Now in its 13th year, the India SSI Study examines seven factors that contribute to new-vehicle buyers’ overall satisfaction with the sales experience (listed in order of importance): delivery process, delivery timing, salesperson, sales initiation, dealer facility, paperwork and deal.

Overall sales satisfaction is 820 index points on a 1,000-point scale, which is a decline of two points from 2011. Satisfaction in each factor declines year over year, most notably in salesperson (down by 6 points).

Honda tops

Among the 12 brands ranked in the study, Honda has ranked highest with an overall score of 835 and performs well across all seven factors. Hyundai ranks second with a score of 829, followed by Maruti Suzuki at 824. Mahindra & Mahindra is the most improved make, achieving a 17-point increase from 2011. Seven of the 12 ranked brands have improved year on year.

“Mahindra customers indicate greater sensitivity toward the convenience of delivery time by the network, which in turn positively impacts satisfaction,” said Arora. “Improved performance on explanations during delivery also contributes to Mahindra’s ability to provide a satisfying customer buying experience.”

According to Pravin Shah, chief executive, Automotive Division, M&M, there were some key factors that led to Mahindra's smart performance. "It is a combination of purchase experience and delivery date promise. At the XUV500 launch, we have deployed various technology solutions like kiosks, tablets among others, to help enhance the purchase experience." And it is preparing itself to handle the SsangYong brand too. "After the XUV500's launch, we expected footfalls from a very different profile of customers and prepared accordingly for it. Since most of our initiatives were developed around this premise, hence we feel we are ready to deliver good experience to our Ssangyong buyers as well," says a confident Shah.

How to win buyers and influence owners

Owners who are highly satisfied with the overall purchase experience have reported higher levels of advocacy and loyalty toward the dealership and the vehicle brand, compared with highly satisfied owners. Among owners who are highly satisfied with their purchase experience at the dealership (satisfaction scores of 882 or higher), 81 percent say they “definitely will” recommend their purchase dealer to a friend or relative. These owners are also far more likely to repurchase or recommend the same brand in the future. In contrast, only 53 percent of highly dissatisfied owners (satisfaction scores of 768 or below) say they “definitely will” recommend their dealer.

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INTERVIEW WITH MOHIT ARORA, EXECUTIVE DIRECTOR — J D POWER ASIA PACIFIC, SINGAPORE



The average number of months’ income remains constant to buy more premium small cars. But isn’t that coming down for regular compact cars?

The small car segment comprises of Entry Compact, Compact and Premium Compact buyers. The average number of months’ of income that a customer needs to provide to purchase his new car has gone down from 11 months in 2008 to 9 months in 2012 for compact cars. However, the proportion of compact car buyers has also come down from 80 percent in 2008 to 51 percent in 2012 among all small cars. This implies that customers are purchasing premium compact cars since the average number of months’ income remains unchanged for all small cars.

Honda has had a tough year. Natural calamities along with the market shift to diesel where it doesn’t have a presence. What did Honda do different that put it on the top of the list?

Although Honda faced multiple natural calamities and it supplies to Indian market were impacted, the overall sales volume during the eligibility period of the study remains largely unchanged.

Honda posts significant improvement in terms of proportion of customers who are pleased with the entire sales initiation experience with an increase of 6-9 percent of customers YoY reporting a better-than-average experience on all sales initiation attributes.

Honda also puts up a strong performance on the factor of salesperson with an 8-point increase. Improved performance on 'Courtesy and Friendliness', 'Knowledge about their vehicles', along with 'Appropriateness of sales pressure over 2011', helps Honda in securing its industry leading performance. Five out of 10 Honda customers were delivered the vehicle as promised; this is the highest proportion among the makes in the study.

M&M’s improvement in the rankings is impressive. What have been the main drivers?

Mahindra is a great success story on SSI, where it ranked at the bottom just a few years ago. Significantly, a higher proportion of Mahindra customers as compared to 2011 report delight on 'Thoroughness of explanations during delivery process', 'Fulfillment of commitments' and 'Appropriateness of sales pressure'. Mahindra customers also report greater sensitivity of the OEM towards ensuring delivery of their new vehicles as per their convenience. The Mahindra network is able to pro-actively manage customer expectations even on the newly launched XUV500 in terms of ensuring that delivery commitments are met.

Volkswagen and Ford, two big global OEMs’ scores fall below the industry average? Have their initiatives for sales satisfaction fallen?

Though VW continues to be below the industry average, it shows improvement on overall performance and across all factors compared to 2011. It shows a double-digit increase on 'Delivery Timing' which is one of the critical factors. Ford continues to be below the industry average and shows a declining trend from 2009 relative to industry average. Ford declines on the Index (by 3 points) and on all factors except 'Delivery Process'. The highest decline is in 'Delivery Timing' by 12 points.

Clearly, both these international brands need to understand local customer requirements better and create network standards that are truly able to deliver performance, thus matching or exceeding heightened customer expectations associated with their brand names.

Tata Motors has been putting efforts to enhance its product quality and consumer experience. What are the reasons that have led to it being at the bottom of the list?

Tata posts an improvement of 5 index points over 2011 and on six factors. 'Delivery Timing' (788 points) emerges as its weakest link.

This is due to the fact that customers report higher disappointment on 'Thoroughness of the explanations during the delivery process' (9%), 'Time to complete delivery process' (9%), 'Ability to deliver at promised time' (8%), and 'Fulfillment of commitments' (7%) compared to customers of other makes in the industry.

In this year’s SSI Study, has any interesting trend been seen?

The performance gap between the best and worst scores reduces to 35 points as against 44 points in 2011. This highlights the improvements made by automakers on the quality of sales experience that is being meted out to customers.

The study also finds that 43 percent of customers purchased diesel vehicles — an increase of 11 percent over last year. Preference of better fuel efficiency on account of increasing petrol prices has escalated this trend. However, at an industry level, customers also report higher waiting times at an average of 17 days for delivery of their diesel cars which has almost doubled over 2011.

In an increasingly dynamic environment, what are the key requirements to improve sales satisfaction of the OEMs? Is the Indian market comparable with the matured Japanese or European market yet?

The Indian car buyer today has a significantly wide range of car models to choose from. Together with the fact that there are multiple information channels and multiple car dealerships vying for his patronage, the car purchasing decision has become significantly more complex than it was just a few years ago.

Given this situation, any support or guidance that OEMs can provide to make the process less daunting for the buyer will definitely be appreciated by the prospective car buyers. The market is still maturing as new players are still entering the industry and information flows are not completely seamless. That said, the Indian car buyer is fast becoming sophisticated and is probably one of the most value-conscious customers in the world today. Meeting or exceeding his expectations is definitely going to be an increasingly difficult challenge for the OEMs in the coming years.

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INTERVIEW WITH JNANESWAR SEN, HONDA CARS INDIA



On the steps taken to ensure customer satisfaction.

At Honda, we have a detailed ‘Sales Process’ manual that is followed by each sales consultant. The comprehensive sales process is documented in the manual and it enables us to achieve a high degree of customer satisfaction. Last year, prior to the launch of the Brio, we had set out to reach a newer, larger and diverse customer base in India. We aimed to maintain our high customer satisfaction standards for them as well in all our services. To meet the expectations of new customers, we incorporated a few steps in our sales process and refined our existing process standards depending on the new requirements. It helped us to ensure delivery of uniform and excellent purchase experience for all our customers across the country through our dealerships.

On maintaining relations with customers who had booked Honda cars but didn’t receive them as promised, due to the impact of the Thai floods and the earthquake in Japan.

It was a very challenging task for us. We proactively rolled out a module to manage the expectations of waiting customers. The dealers were guided to be clear in their communication and were asked to reset the delivery dates with the customers based on revised dispatch schedule.

We handled the waiting customers with utmost responsibility and care. The dealers were asked to be in constant touch with the customers and proactively inform them about the delivery status at regular intervals.

On the steps taken to train and maintain dealer ties.

We at Honda follow a standard training procedure in which every new staffer in the sales vertical at the dealership undergoes a series of training programmes. We first familiarise them with the Honda philosophy and Honda Way, which is followed by sales process, product familiarisation, selling and soft skills. Thereafter, we check the implementation of the same during interactions through various audits and mystery shopping.

On the current customer base of Honda in India.

We have about 530,000 happy customers in India.

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INTERVIEW WITH PRAVIN SHAH, CHIEF EXECUTIVE, AUTOMOTIVE DIVISION, MAHINDRA & MAHINDRA



On the steps taken to ensure customer satisfaction.

We had initiated eDCM — electronic demand change management — as opposed to the Supply Change Management process a couple of years ago to optimise our customer order intake to production schedule of the desired variant and colour. eDCM has matured and we have over 88 percent adherence on CPD (Customer Promised Dates). Customers are sent messages in stages — CPD, vehicle shipped date, vehicle reached dealership date or likely change in CPD. This process is seen as fair and transparent to help improve brand perception.

On M&M maintaining relations with customers who book their vehicles but don’t receive them as promised.

We have a very transparent process to inform CPD or likely change of CPD. This ensures the customer is not kept in the dark. Our response time to customer query is quick and personalised (no computer- generated mail acknowledgement). We have ‘With You Hameshaie WYH tweet handle , customercare@ mahindra.com mail ID, 24*7 1800 toll-free and customer FAQ section in each of our brand websites to facilitate customers reaching us and enabling a quick response.

On the steps taken to train and maintain relationship with its dealers While we have high focus on continuous training like any other organisation, there are some key initiatives that help us conduct effective on-the-job training (OJT).

We have developed expert internal trainers to conduct technical and non-technical OJT. We also do second-generation Dealer Owner programmes to improve dealer engagement with the future generations of our existing dealer partners.

Current customer base of Mahindra passenger vehicles in India.

The Mahindra passenger vehicles population is 1.32 million.

On the key factors that led to Mahindra being the most improved make in the Study.

It is a combination of purchase experience and delivery date promise. At the XUV500 launch, we deployed various technology solutions like kiosks, tablets among others, to help enhance the purchase experience.

SUMANTRA BAROOAH