Published: Mint dated 23 rd May, 2011 Indicus Consumer Data Products The heterogeneity that characterizes the modern Indian consumer has created a maze that marketers would like to unravel in order to target their products and services precisely. In this fortnightly series, Indicus Analytics will present the various facets of urban consumers, across geographies and socio-economic groups
There is a clear correlation between income and vehicle ownership—as households move up the income ladder, they also move from cycles to two-wheelers to cars. While the penetration of cars varies between a minimum of 2% of households in the lowest socio-economic category (SEC) of urban SEC E households to 29% in the richest urban SEC A households, the penetration of two-wheelers varies from 27% in SEC E households to 74% in SEC A households. State-wide differences are wide, given the large disparities in levels and distribution of incomes; so even in the most affluent SEC A category of urban households, more than half own cars in Delhi and Chandigarh, while the same segment in Bihar and West Bengal sees less than a quarter of car density. Overall, the northern states do better in car ownership while the southern states top in two-wheeler density.
Looking at district-level data, the top five districts in car penetration in urban SEC A households are Solan, Chandigarh, Gurgaon, Faridabad and Delhi, showing the concentration in this region. When it comes to urban SEC E households, apart from these districts, Thiruvanthapuram, Srinagar, Gautam Buddha Nagar also feature on the top. In two-wheeler penetration in the SEC A households, it’s the smaller cities that lead, and these come from across the country—Erode, Dibrugarh, Surat, Varanasi, Ahmedabad, Nashik, etc. Among the lowest SEC E segment, the urban areas of Erode, Hardwar, Mysore, South Goa and Hisar rank at the top, while the metros of Kolkata, Mumbai, Thane, Delhi and Gurgaon have the lowest levels of two-wheeler penetration. Clearly, it is not just the dynamics of income, but the characteristics of the towns also make a difference to the needs of vehicle ownership.
Although the SEC A segment is the most affluent, 10% of these households earn less than Rs. 3 lakh a year. Similarly, 4% of the households in the SEC E segment earn more than Rs. 10 lakh a year. Finer segmentation of consumer households, therefore, helps in pinpointing the markets with greatest potential. The highest penetration of vehicles is the sub-segment of SEC A, the richest segment in urban India, comprising households whose chief wage earners are highly educated, married with married children. Here, the chief wage earner has reached the peak of his career and the household income is supplemented by the younger generation, which is also highly educated. Their lifestyle requires vehicles to ferry various members of the family to their various tasks, and public transport is not a favoured option. More than one-third of all households in this segment have a car, while, apart from Delhi, Thane, Mumbai and Kolkata, more than three quarters of the households in this segment have two-wheelers. The penetration of cars and two wheelers in the less educated segments is highest amongst those households where chief wage earners are predominantly school educated businessmen or skilled workers, in their older years, with married children.
This segment is the third largest in population and comprises joint families, explaining the higher household income among less educated segments and consequently higher demand for vehicles. The occupation of the chief wage earner is also important—we find the ownership of cars is higher in the segments comprising professionals as chief wage earners, rather than managers and executives. In general, apart from income, the life stage of the chief wage earner is another critical determinant of vehicle ownership—they move towards buying cars by the time they are in their middle years with young children. So even at the very lowest levels of income, where chief wage earners are unskilled workers, there is a minuscule but significant ownership of cars; in effect, aspirations do get fulfilled for some even at the lowest end.