Interview with Sumit Arora, Research Director—Automotive, Ipsos Marketing

Company Description: Ipsos is a client-focused organisation providing research services to clients on a global basis. It is the only global market research company that is still controlled and operated by market researchers.  Apart from exploring market potential and market trends, it tests products and advertising. It helps its clients build long term relationships with customers and also studies audiences and their perceptions of various media.

Your company name was earlier Synovate. It’s been taken over by Ipsos. Can you briefly tell us about this new identity and the transition?

Yes, the new identity is Ipsos, which is the world’s third largest research company. The great thing about Ipsos today is that it is the only such company which is owned and managed by researchers themselves. Our presidents are themselves researchers. While if you look at other companies, they are essentially a part of big conglomerates, which are not really research companies and could be into other things also. As far as the transition is concerned, it the erstwhile Synovate has been taken over last year and from 1st January this year; we are under a common brand name i.e. Ipsos.

Your company is basically into automotive research which also involves conducting clinics. Can you shed some light on this?

Our company is not only into automotive research, but in a lot of other areas. We do research work in FMCG, consumer durables, etc. As far as automotive is concerned, we do conduct clinics as you have rightly mentioned. We also do loyalty research i.e. Customer Satisfaction Check. We also do brand-related research like brand tracking, advertising, etc. So it encompasses the whole area of consumer market research which any automotive company would like to do right from stage 1 where a development of an idea is concerned to the last stage which is related to customer satisfaction.

Is your research primarily focussed on the car industry or does it incorporate the entire automotive industry?

It incorporates the entire automotive industry. We do our work in cars, two-wheelers, commercial vehicles, tractors, and whatnot. We also cater to automotive ancillaries like the lubricants, tyres and so on.

Would you like to name a few important clients that your company has serviced? Have they primarily been overseas companies?

As far as our client base is concerned, it’s virtually the entire gamut of the industry. Hero MotoCorp, Bajaj, HMSI, Maruti Suzuki, M&M, VW, Hyundai, Ford, Skoda, Mercedes, BMW, Audi, Tata Motors (both domestic and international), are some of the prominent clients. In lubricants we have Shell, in tyres we have Michelin and JK.

There are a lot of new players coming into the market. Do you see enhanced business opportunities?

Oh yes, we definitely see enhanced business opportunities. Overall, the market research industry itself is going through a massive growth phase. More particularly, it is happening in the automotive domain. This is because as new players enter, the market gets more and more competitive and they need to understand consumers better. So that is being done and as you have rightly mentioned the overseas players are coming in and they want to understand the Indian consumers better. So a lot of research is happening. It really helps us with our global alignments as Ipsos is itself a large player worldwide. So those partnerships are also taken forward in India.

India is basically a small car market. Do you think it has become a hub for manufacturing compact cars that caters to both domestic and overseas markets?

Definitely! That is the way forward and in tune with the government policy. If you see the government policy in India, it is not biased towards domestic or overseas players. Its focus is that India should become a manufacturing hub. A lot of manufacturers are also focusing their plans that they are going to use India not only to serve the domestic market but also to start exporting from here. The exports are growing faster than the growth registered in the domestic market. While it’s already happening in the passenger vehicle space, we expect an explosion in exports in the two-wheeler space also.

India is seeing a boom in car retail sales which has in turn spawned a massive service and repair industry (Carnation, OEM service outlets etc). Does this all mean the end of the road for the unorganised roadside repair and service shops?

I wouldn’t say that it is the end of the road for the roadside repair and service shops.  I would say slowly they are going to get organised. What is happening is that the amount of car volumes sold is very large. And to service that, you need more service and repair outlets.  All of these may or may not be able to get completely serviced by what OEMs are providing currently. And non-OEM players like Carnation are coming into the picture. This itself shows that the non-OEM side of the business is getting organised. So this will have an impact at various levels. There will be stiffer competition for completely unorgainsed small roadside repair and service shops. But I believe they will continue to exist. They may not offer high-end expert repair, but for small things they will continue to exist as they charge less.

Comparing India and China, what are the factors that distinguish these two car markets? Are there any lessons to be learnt from China?

I am not an expert on the Chinese market. But one thing you have to consider is that in the last 10 years, China has gone through a boom phase. The size of the Chinese automotive market in the passenger vehicle space is currently 18 million units as compared to 2 million units in India.  Having said that, we were slightly higher two decades back. They have gone through this phase because of the infrastructure they have created like manufacturing bases, etc.  And also due to the general boom in the Chinese economy across the board which led people to have more money. Because of the higher disposable income, they were buying more and more cars. So China has definitely gone way ahead of us. And it’s a controlled economy unlike ours.  As we are going to see the development of the infrastructure and other economic parameters, we will see a massive growth for India also.  The predictions for 2020 at 7-8 million units per annum are very sound. Even though we had a bit of a downturn last year, our long-term predictions remain buoyant.

What are your views on India’s used car segment? What would be its size in the next decade? Has the influx of organised players benefited this segment significantly?

The Indian used car market is currently as big as the new car market. The used car market will continue to remain high as the new car market. But has it changed with the arrival of new players? In a certain way, Yes! Until now, the organised used car market is very small. Most of the industry players are looking at it as a good business opportunity. So they are getting into it. However, the unorganised sector will continue to remain big. Because it’s only an additional revenue stream for vehiclemaking companies and not as large as doubling their volumes. The other factor is within the unorgansied sector also is getting organised. These people who had 1 used car outlet now have 5.  So they are expanding. 

Lastly, the vehicle parc in India is increasing by the day. Do you feel that the government should drastically finetune its infrastructural bottlenecks? What about improving the public transportation system in cities and small towns?

There is no doubt that the government needs to invest more heavily in the infrastructure.  Going forward, it will either be a main impediment or a main boost for the car industry. Having said that, people will still continue to buy cars. For Indians, a car is a status symbol. It is the second biggest purchase you do after a house. While you can’t carry your house around, you can carry your car around to show what you are. So it will continue to be buoyant. With better infrastructure like better roads, more CNG and fuel stations, we can go faster. So that will continue to be a big push factor. Coming to public transportation system, we have seen it getting improved in certain parts of India. Delhi is a very big example. We have Delhi Metro which serves 20 lakh people in a day.  Has that pushed away car sales? No! In other areas, will it push away car sales? No! Will it impact car sales in a certain way? Yes, it will! The primary case study is the Delhi market, where the cheapest or the least priced car is not selling. The biggest Metro rail users are actually not car potential owning by population. But whoever has started using it is going towards expensive utility vehicles, sedans, etc.  So India will become a more evolved market. Will public transportations continue to improve? We hope so. The govt has some clear plans and JNURM is one of those which will push for better transportation facilities across cities. Mumbai Metro should be ready by next year. Chennai has a good system right now. Now Delhi is getting CNG buses. Bangalore is also looking towards having the Metro. So all these will happen, but will not act as an impediment to car sales. The other critical thing that passenger vehiclemaking companies need to remember is not necessarily see public transportation system as a competition. A public transportation will never be a house-to-house vehicle or a point-to-point one. So, these vehiclemaking companies need to perhaps retune their strategies or the vehicles or products they are going to produce according to this need. It will be like a typical hub-and-spoke model. For example, if you may have a vehicle which will transport people from the metro station to their houses, then you have serviced a specific need and can still be an ‘add-on’. Wherever, the public transportation is good like Europe or China, car sales are still high.