From Discounts to Delight: The Shift in Auto Customer Loyalty

Not too long ago, the Indian automotive market was synonymous with 'price sensitive', 'mileage driven', 'small', and 'affordable' cars, with a focus on maximising value. Entry-level hatchbacks dominated every nook of the country, reflecting a consumer base that prioritised fuel efficiency and upfront cost above all else. Cost discounts, exchange bonuses, and mileage figures were often the driving factors for many purchasing decisions.

But the landscape is rapidly changing. With India now standing firm as the 3rd-largest automobile manufacturing market globally, vehicle sales market share data reveals a shift from small cars to SUVs.

Figure 1 Data taken from the Society of Indian Automobile Manufacturers

What factors drive this dramatic shift in purchasing patterns? If we closely study the strategies of large OEMs in India, we would realise that the Indian car market is in the middle of an evolution driven by consumer preferences.

Price-sensitive market losing steam: For decades, Maruti Suzuki dominated the market by serving value-for-money products. But now, with an increase in per capita GDP and an aspirational youth population, demand for small and ‘affordable’ products is diminishing, as evidenced by a decline in market share from nearly 45% in FY15 to ~40% in FY25.

The market share lost by Maruti Suzuki shifted to other OEMs like TATA and KIA, which offer more than just mobility through a premium driving experience.

Digital Research: The Indian car buyer today walks into the showroom having already made a decision. According to industry data, 92% of buyers research online before visiting the showroom. The salesperson is no longer the first source of information- Digital AI assistants, Virtual showroom experiences with Maruti Suzuki Chatbox are gaining favour with potential customers.

The NEXA-Experience: Back in 2015, Maruti Suzuki anticipated the changing dynamics and shifted from a quasi-transactional car-buying relationship to a consulting relationship by launching NEXA, with the goal to create a differentiated car-buying experience. Salient features include Valet parking and personalised beverages, making the purchasing experience memorable. The results of the above strategy are evident in FY25, with NEXA channel accounting for 30% of OEM's domestic sales. Based on experience-based marketing rather than pricing incentives.

The inference here is very unambiguous; experience, operationalised through people and process, is a measurable commercial strategy.

Maruti Suzuki's approach of making vehicles "Sho-Sho-Kei-Tan-Bi", a Japanese philosophy of the Global Suzuki group, which translates to "Smaller, Fewer, Lighter, Shorter, Beauty", basically focuses on maximisation of essential value, diverges from the SUV-isation of the domestic market.

The Insider Angle: From my stint at Maruti Suzuki, with experience in Strategic Sourcing, I can infer that the tensions between divisions and functions to cope with the changing scenario between mass-market and premiumisation with features like Safety features and Global NCAP ratings, the premium touch of interiors and numerous trim-level distribution often make strategies less relevant in a dynamic environment pushing the OEM to reduce model development cycle and introduce refresh models.

On either side of this shift:  Was Maruti Suzuki an automobile company, or a customer-experience company? NEXA was their answer; imperfect, evolving, but fresh and contemporary in its vision. Today, as India's automobile consumer matures faster than most boardroom strategies can keep pace, the industry faces a choice that is ultimately an organisational one: do we build institutions that deliver experiences, or do we continue to optimise machines that deliver reasonable value for money? The consumer has already decided. The question is whether firms are listening — not only on paper, but in the seismic signals of who they are becoming in their catalogue of offerings.