Managerial Economics Assignment

Survey on Demand of Hyundai Cars

Submitted to

Dr. Parneet Kaur

Submitted by

Prince Kalia

Roll no. 20421123

MBA-1

Section-C
 INTRODUCTION

Demand
Demand is the quantity of a good that consumers are willing and able to purchase at various
prices during a given period of time. Demand for a specific item is a function of an item's
perceived necessity, price, perceived quality, convenience, available alternatives, purchasers'
disposable income and tastes, and many other factors.

Determinants of Demand

When price changes, quantity demanded will change. That is a movement along the same
demand curve. When factors other than price changes, demand curve will shift. These are the
determinants of the demand curve.

1. Income: A rise in a person’s income will lead to an increase in demand (shift demand
curve to the right), a fall will lead to a decrease in demand for normal goods.

2. Consumer Preferences: Favourable change leads to an increase in demand, unfavourable

3. Number of Buyers: the more buyers lead to an increase in demand; fewer buyers lead to
decrease.

4. Price of related goods:

a. Substitute goods: price of substitute and demand for the other good are directly related.

Example: If the price of Tata cars rises, the demand for Hyundai cars should increase.

b. Complement goods : price of complement and demand for the other good are inversely
related.

Example: if the price of Insurance and RC rises, the demand for cars will decrease.

5. Expectation of future:

a. Future price: consumers’ current demand will increase if they expect higher future prices;
their demand will decrease if they expect lower future prices.

b. Future income: consumers’ current demand will increase if they expect higher future
income; their demand will decrease if they expect lower future income.
 DEMAND SURVEY
A survey was conducted at a Hyundai Motors Showroom (Yashodha Hyundai, Sirhind Road,
Patiala). The survey was concentrated on expected buyers that come to this showroom for
buying cars as well as existing customers of Hyundai Motors which recently came in contact
for service and maintenance of their cars. A survey in form of Google forms was provided to
them and the answers from the customers were recorded for that day. A total of 19 customers
including existing and expected customers were surveyed on that day. The questionnaire
consists of well-designed Multiple Choice Questions, Checkbox Questions and short answer
type questions. These questions were made on predefined determinants of demand as
mentioned above. The questions consists the determinants of demand like price, perceived
quality, convenience, available alternatives, purchasers' disposable income and tastes, and
many other factors.

This survey basically shows that on what factors do the demand of Hyundai cars is affected.

Some of the noted points were as follows:

1. Mostly people of annual income group from Rs 2,50,000 to Rs 10,00,000 buy cars
from Hyundai motors. This income group covers the middle class people of
Punjab (Patiala) that were interested in buying cars from Hyundai Motors. It is
also noted that people from this income group were able to spend Rs 6,00,000 to
Rs 10,00,000 for their cars. It shows that people of this income group generally
opt for a value for money car that fits in their budget which is provided by
Hyundai. Also most of the Hyundai cars are priced between 6-10 lakhs of price
range that shows Hyundai acknowledges that its cars are mostly preferred by
middle class people. So, Income of people is a factor that affects demand of
Hyundai Cars.
2. About 52.6% of people are interested in buying SUV’s other than Hatchbacks and
Sedans. That shows the taste and preference of the local people of Punjab.
Also Hyundai shares its sales charts on their website which shows that around
22,000 units of its SUV’s (Venue, Creta and Tuscon) are sold of its total 50,000
car sales per month. It shows that around 44% of its total car sales in India is of
SUV’s.
3. It is noted that due to huge amount of sales in SUV segment Hyundai Motors is
concentrating on their SUV cars line up as there are 4 models in that segment and
2 models are upcoming. Hyundai is focusing on providing desired SUV’s for each
income segment of people by providing the SUV’s ranging from Rs 6 Lakhs to Rs
30 Lakhs. This shows the number of buyers which Hyundai is concentrating
on.
4. About 47.4% of buy petrol cars as they are cheaper than diesel, CNG or electric
cars. This shows price effect on demand. Also Petrol car maintenance as well as
service cost is lower than any of its alternatives. Petrol cars also need lesser
services over the years and it also can stay on roads over 15 years as per
 government regulations. This shows the effect of future expectations on
demand.
5. Most people buying for cars under Rs 10 Lakhs prefer mid variant over the top
variant of the car. As shown in 1st point normally these people are middle class
having annual income below Rs 10 Lakh. So this shows the effect of consumer
preference on demand. It is also noted that people buying cars above Rs 10 Lakh
prefer top variant of that car which includes all the features offered in that car.
Also they opt for certain optional luxury features like Sunroof, connected car
tech, voice commands, automatic climate control etc. Therefore the car is a luxury
good for them.
6. More than 70% of people want essential basic features in their cars like Touch
Screen system, Rear Ac vents, Reverse parking camera, Front and rear adjustable
headrest, Push button roll down windows and Front and rear armrest. More than
50% of people want extra features in their cars like Keyless entry and go,
Automatic climate control, Alloy wheels etc. Also it is noted that people buying
cars over Rs 10Lakhs also needs luxury features like Sunroof, connected car tech,
voice commands, wireless charging pad etc. in addition to the basic features
mentioned above. As cars are a luxury item for them, they wanted most of the
features in their cars irrespective of extra money they pay for it. This shows the
taste and preference of people with different income levels and money they
want to spend on cars.
7. According to the conducted survey 47.4% people were concerned about the safety
of their car. GNCAP is an association that performs crash tests of modern Indian
cars and give them safety ratings. Around 84% of people knew about these safety
ratings of their car. Above 80% of people needs all the basic safety features in
their cars like ABS with EBD, traction control, dual front airbags and rear parking
sensors. People buying cars over Rs 10 Lakhs needs additional safety features like
Brake Assist, Fog lamps, Rear defogger and wiper, Auto dimming IRVM,
Projector Headlamps and Rear Disc brakes. This shows the modification of
consumer preference with its future expectations.
8. Maruti Suzuki, Kia Motors and Tata Motors are major Competitors of Hyundai
motors in present scenario. These competitors also provide good cars in
competition with Hyundai but Hyundai provides better features, refined engines
and good resale value with its cars at even more competitive price. As Indian
customers need better product with lesser price which Hyundai provides, its cars
sells more. This shows the effect of substitute product on demand.
9. Over 70% of people buy Hyundai cars for their good resale value, low service and
maintenance cost and better features. But due to lesser safety, average sales and
services its competitors eats up its sales. This shows the effect of substitute
product on demand.
10. 63.1% people find the RC and insurance cost of their cars high or very high. Also
36.8 % people find it average. But none of them find these costs low or very low.
Around 10- 15% of the car’s total on road price is its Registration cost and
Insurance cost, which increases as price of the car increases. These costs vary
 from state to state in India. That is why people prefer more to compact cars which
includes Compact SUV’s, Compact sedans and Hatchbacks. As suggested by
name, these are compact as well as lower in cost which saves people some
amount of money in GST, Vehicle Registration and Insurance. This shows the
effect of complementary product on demand.
11. 57.9% people do not want to buy the car accessories from the showroom as they
are more costly. Also car accessories of luxury or high end cars are rarely
available in market. So, people buy high selling regular cars, so that they can fit
accessories or even parts more easily and price effectively after market. This
shows the effect of complementary product on demand.

The data collected for the above survey and the questionnaire provided to Hyundai
customers is attached below: