Pratul C Lobo_MMS Marketing - Need Analysis of Auto Loan Customers_ICICI Bank

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Summer Project ReportOn

N E E D A N A LY S I S

O F

A U TO L O A N C U S TO M E R S

Submitted To:

ICICI Bank

Submitted By:Pratul Lobo

MMS Marketing

N L Dalmia Institute of Management Studies and Research, Mumbai(Batch: 2008-10)

Acknowledgement1


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I would like to express my sincere thanks to ICICI Bank for providing me the requisite

material to complete my project.

I would also like to take this opportunity to express my deep and sincere gratitude to Mr.

Srikanth Mahadevan, National Sales Manager (Vehicle Loans), ICICI Bank Ltd. for

his valuable insight and encouragement in implementing this project. It is because of his

support that I could synchronize the efforts in converting the manifold features of the

project.

I am really thankful to all the respondents who helped me gain the required informationand spared their precious time in order to make the research project a success.

I also would like to acknowledge the infrastructure support provided by my Director Prof.

P.L. Arya and the support of my colleagues.

Date: 1 st July, 2009

Pratul C Lobo

MMS (Marketing) 2008-10

LETTER OF TRANSMITTAL

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Mr. Srikanth Mahadevan

National Sales Manager (Vehicle Loans)

ICICI Bank Ltd.

Respected Sir,

As per your directions, I have completed my research on Need Analysis of Auto loan

Customers . The report is based on interviews and responses of respondents from

Mumbai. The project was carried from 4 th May 2009 to 30 th June 2009.The complete

methodology and conclusions derived on the basis of the responses is described in the

report. I believe you will find the results mentioned in the report to be interesting and

certainly useful.

Table of Content

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S. No Topic Page No.

1. Introduction

ICICI Bank An Overview 5

2. Executive Summary 6

3. Methodologya. Problem Statement and Objectives

b. Sampling Strategy1013

4. Summary of findings, Recommendations and Conclusion

1. Summary of findings2. Recommendations & Conclusions

1539

5. Appendices

1. Questionnaire2. Bibliography

4448

ICICI Bank

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Overview:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,793.01 billion (US$75 billion) at March 31, 2009 and profit after tax Rs. 37.58 billion for the year ended

March 31, 2009. The Bank has a network of 1,451 branches and about 4,721 ATMs in

India and presence in 18 countries. ICICI Bank offers a wide range of banking products

and financial services to corporate and retail customers through a variety of delivery

channels and through its specialized subsidiaries and affiliates in the areas of

investment banking, life and non-life insurance, venture capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai

International Finance Centre and representative offices in United Arab Emirates, China,

South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has

established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)

are listed on the New York Stock Exchange (NYSE).

Vision:

To become the leading player in Indian financial markets and grow our overseas

presence.

Executive Summary

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Gone are the days when people would dip into their cash reserves and savings to buy

cars. Almost all both individuals and companies prefer to buy vehicles on

installments, because that allows them the liberty of not having to invest a huge amount

upfront. Thats the need gap being filled by almost all banks and financial institutions,

who now offer auto loans on lucrative terms to consumers, egging them to fulfill their

dreams and aspirations, just by paying some extra interest. According to industry

estimates, in the last few years alone, 60% of cars were bought through finance deals.

Two-wheelers, being cheaper, had a smaller share in the auto loans market.

With more and more attractive car and two wheeler brands and models jostling for the

consumers attention, banks and financial institutions, are also falling over each other to

offer the most customer-friendly loan schemes, which can suit even the most humble

earnings. Thats what creates an embarrassment of riches a confusion over which

bank to choose and which loan to opt for.

Based on certain conditions, banks in India are more than willing to extend a car loan to

finance the major share of the car's cost.

Certain terms of services offered by Banks are explained as follows:

A secured loanBeginning with the basics, a car loan by nature is a secured loan. The vehicle or car you

are buying will be the collateral or security for your loan. Until you complete the loan

repayments, your lender will have complete authority over the purchased car.

The margin money or down payment

Initially, for a car loan, there is some amount (usually 15% to 30% depending on the car

model and bank), which has to be paid up front to the car loan company. This amount is

called the margin money or the down payment.

Ex-showroom or On road prices:

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http://auto.indiamart.com/auto-finance/http://auto.indiamart.com/auto-finance/


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Some banks provide car loans at On Road Prices. This means that the loan amount

sanctioned for your cars will contain the ex-showroom price of the car plus the

insurance, the road tax and any other amount that is required. The car loan amount in

case of On Road Price will be significantly greater than the Ex-showroom price of the

car. Let us take an example.

Fixed and Floating Interest Rate:

A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during thefixed rate period of the loan. This allows the borrower to accurately predict their futurepayments.

A floating interest rate loan is also referred to as adjustable, variable or flexibleinterest rate loan. The home finance company will decide upon a base rate -- knownas the floating reference rate. In such a loan, the interest rate keeps changing. So, theinterest rate on the loan will go up or come down depending on how the interest rate inthe economy is moving. This, in turn, will impact the EMI.

Loan to value , a ratio of the outstanding debt on a property to the market value of thatproperty

Loan tenor is defined as the length of time until a loan is due.

Structured home loans are products which are mapped to specific individual needs as

against a vanilla product offered to the customers at large. These are dependent on

factors like the profile of the customer, his need, type of properties etc.

Table repayment structure

This is the most common type of repayment structure where you pay regular

even amounts, subject to interest rate changes. Your early repayments are

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mostly interest with a small amount of principal. As you pay off your loan, this

ratio gradually reverses.

Step Down Payment Structure

The EMIs are large in the early part of the tenure, and are lowered after some

years.

Step up Payment Structure

The EMI is lower in the early part of the repayment period, which gradually

increases as the income of the customer increases. Typically, in this case, the

loan is slotted into three ranches based on the potential income profile of the

customer.

Balloon payment Structure

A balloon payment is paid back when the loan comes to its contractual maturity

e.g., reaches the deadline set to repayment at the time the loan was granted

representing the full loan amount (also called principal). Periodic interest

payments are generally made throughout the life of the loan.

Bullet payment structure

Bullet payment involves payment of standardized equated monthly installments

(EMI) for 11 months of a year except for an increase in the EMI for one month

per year of the loan period.

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Motor Finance Process

Submission of filled out Application Form. Login, with all required documents.

Residence verification, Office verification and Tele- verification at residence &office. Normally done by external agencies.

CAM (credit approval memo) report. Industry credit match with other banks and finance institutions for credit history. Final credit approval and amount of loan eligibility are determined at this point. Submission of signed agreement, post dated cheques along with other necessary

documents. Pre-disbursal check at operations. Pre-disbursal call to the customer for confirming the EMI and interest rate as

documented by the customer. Disbursement. Release of payment and vehicle release order to the specified authorized dealer. Letter of communication send to the customer with all details for future reference.

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Methodology

PROBLEM STATEMENT:

To carry out a need analysis of auto loan customers and develop appropriateproducts/schemes to fulfill these needs.

RESEARCH OBJECTIVES:

1. To ascertain the perceptions of customers regarding auto loan financing provided

by financial institutions.

2. To assess the auto loan requirements of car owners and prospective car owners

and

3. To develop appropriate products/schemes to fulfill these needs.

RESEARCH DESIGN:

The research group used the exploratory and descriptive design.

Benefits Of the Study:

The study will help ICICI Bank Car Loans to devise appropriate products/strategies.These products would help to fully complement their customers needs with regards to

their loan requirements.

Importance of the Study:

With more and more attractive car brands and models jostling for the consumers

attention, banks and financial institutions are competing aggressively to offer the most

customer-friendly loan schemes. In this context, it is important to understand the

consumer buying behaviour of auto loan customers.

Literature Review Plan:

A list of books, websites, journals and newspapers that was referred to and used for

literature review is provided.

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Secondary Research:

Collection of data from websites and catalogues to understand the loan products and

charges of auto loans offered by different Banks.

Primary Data Collection Plan and Sampling Strategy:

A survey was conducted of 107 respondents. The sample was selected on a simple

random probability basis within the region of Mumbai.

The interviews were conducted and data was collected accordingly. Standard editing

and coding procedures were utilized to ensure maximum accuracy and un-ambiguity.

This includes careful interpretation and good judgment of the data. Simple tabulation

was utilized to analyze data.

Steps in the Development of the Survey Instruments

The main instrument required for survey was a well-developed questionnaire.

The questionnaire development took place in a series of steps as described

below:

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Research objectives been transformed intoinformation objectives.

The appropriate data collection methods weredeterminedStep 2

Step 3 The information required by each objective is beingdetermined.

Specific Questions/Scale Measurement format isdeveloped.

Step 1

Step 4Question/Scale Measurements were evaluated.


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Limitations of Study:

Time availability was one of limiting factor due to which we will have to limit our sample

size.

Limited choice of application based software.

Limited expertise in analysis of data through use of application based software.

Limited access to secondary data.

Bibliography: A list of books, websites, journals and newspapers that was referred is

provided

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Step 5 The information objectives needed weredetermined.Step 6

The questionnaire and layout was evaluated.Step 7

Step 8Revise the questionnaire layout if needed.

Step9The Questionnaire format is finalized.

Research objectives were transformed intoinformation objectives.


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SAMPLING STRATEGY

1. Target PopulationThe Population consists of all customers desirous of financing their car purchase

through loans provided by banks.

2. Sample frame

The Sample frame consists of all customers visiting various car dealerships.

3. Sampling Method

Probability sampling is used as the sampling frame is available, population is

homogeneous and population details are available.

4. Sampling Procedure

Simple random sampling

The population has different categories like people belonging to different age groups,

different income levels each have different perceptions of a loan product depending

upon their need. So we are using simple random sampling.

5. Description of the Sample

The sample size of 107 was collected by interviewing customers at the following

dealerships in and around Mumbai:

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Dealership Brand

Concorde Motors ( India ) Limited (CMIL),Prabhadevi

Tata Motors

Spectra Motors Ltd , Goregaon Maruti

Laxmi Cars Pvt. Ltd., Mira Road Maruti

Autograph Cars India Pvt. Ltd, Andheri Skoda

Solitaire Honda, Borivali Honda

Modi Hyundai, Goregaon Hyundai

Ashtavinayak Auto Private Limited, Malad General Motors

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http://maps.google.co.in/maps?hl=en&ie=UTF8&q=spectra+motors+goregaon&fb=1&split=1&gl=in&view=text&ei=AsBISuCsCJfEuwPU_oGrBg&cd=1&sll=19.165087,72.842685&sspn=0.006295,0.006295&latlng=19165087,72842685,15383222931375026084http://maps.google.co.in/maps?hl=en&ie=UTF8&q=spectra+motors+goregaon&fb=1&split=1&gl=in&view=text&ei=AsBISuCsCJfEuwPU_oGrBg&cd=1&sll=19.165087,72.842685&sspn=0.006295,0.006295&latlng=19165087,72842685,15383222931375026084


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Summary of Findings

Overview of the Sample Size:

Price Range 1-5 lakhs 10-15 lakhs 5-10 lakhs

Survey Size 65 5 37

Interpretation

The sample size indicates a larger proportion (61%) of customers visiting autodealerships around Mumbai had a preference for cars within the price range of Rs. 1-5lakhs (Small Car segment).The Mid Car Segment (34%) was preferred by customers at a price range of Rs. 5-10lakhs.

A small percentage of the sample size (5%) preferred the luxury car segment for carsprice above Rs. 10 lakhs.

As part of the questionnaire, the respondents were asked to choose between 3 differentbanks i.e. Bank A, Bank B and Bank C offering auto loans with differing terms of services.

The Terms of services offered by the 3 banks were as follows:

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Auto Loan Services Bank A Bank B Bank C

Flexible EMI repayment options Available Not Available Not Available

Loan Disbursement (in days) 1-3 days 6-8 days 10-12 days

Loan to Value (LTV) deal (%)*(On-Road Price)

90-100% 85% 80%

Ceiling on Loan amount No Ceiling

No Ceiling Rs. 10 Lakhs

Loan Tenor(Maximum No. Of Years)

7 6 5

Down Payment (%) *(On-Road

Price)

0-10% 15% 20%

Prepayment charges*(On % of Principal Amount prepaid)

5%*(full repayment only)

3% 2%

Rate of Interest*(as per industry average)

1.0-1.5% above At Par 0.5-1.0% below

Results

Bank A Bank B Bank CTotal

15 61 31 107

Interpretation:

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The Small Car segment consists of cars within the price range of Rs. 1-5 lakhs. Thetotal number of respondents in this segment was 65.

A)

Interpretation:

The data clearly

shows a

preference for

fixed rate of interest across

all age group

categories

(76%). The

preference for a floating rate of interest forms a small but substantial proportion (31%)

among the age group of 18-30 years only. Among the older category of customers, this

preference is negligible.

This data indicates that the risk appetite of customers in the current economic situation

is low across all age group categories.

B)

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Interpretation:

55% of customer preferred a loan tenor of 5 years while only 1% of the respondents in

the small car segment preferred a loan tenor of more than 5 years. 25 % of customers

had a preference for 3 years.

The data indicates that customers do not wish to prolong their loan tenor beyond a

reasonable period of time and generally prefer 5 years as a safe and affordable period

for a loan tenor.

C)

Interpretation:

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A majority of respondents (58%) preferred a Loan to Value Deal in the range of 80-90%while preferences across other categories were minimal.

D)

Interpretation:71% of respondents said Yes to structured EMI payment methods which was suited totheir needsStructured EMI payment preference was highly preferred among the younger group of respondents. The preference for structured payments decreases gradually among theolder group of respondents.

E)

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Interpretation:

Age Group 18-30 years: 60% respondents preferred the Step Down payment method while 28%

preferred the Bullet payment method.

31-40 years: 82% respondents preferred the Step Down payment method.

41-50 years: 88% preferred the Step Down payment method.

51-60 years: 50% preferred the Bullet payment and Balloon payment each.

The data indicates that the Step Down mode of payment (67%) was preferred across allcategories while the Bullet Mode of payment (22%) was the second most preferredchoice.

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F)

Interpretation: Respondents were offered three choices of banks A, B or C which

offered customers different terms of services.

Of the 65 respondents surveyed in the Small Car Segment, 58% preferred Bank B, 28%Bank C and 14 % preferred Bank A.

Age Group:

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18-30 years: 60% of respondents preferred Bank B, 21% preferred Bank C and 19%preferred Bank A

31-40 years: 69% preferred Bank B and 31% preferred Bank C

41-50 years: 46% chose Bank B, 38% chose Bank C and 16% chose Bank A 51years and above: 50% had preferred Bank B and C each.

G) Importance of Auto Loans Terms of Services:

Interpretation: Among all respondents, 83% ranked Rate of Interest as the mostimportant factor in selecting an auto loan

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Interpretation: 48% of respondents selected Down Payment as the second mostimportant factor while 23% selected Prepayment charges.

Interpretation: 35% of respondents preferred the loan tenor as the third most importantfactor while 25% selected Down payment and 17% loan disbursement.

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Mid-Car Segment

The Mid-Car Segment consists of vehicles in the price range of Rs. 5-10 lakhs.

A)

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Interpretation:

Age Group 18-30 years: 81% preferred a fixed rate of interest

31-40 years: 85% preferred a fixed rate of interest

41-50 years: 83% preferred a fixed rate of interest

51years & above: 100% preferred a fixed rate of interest

Overall, 84% preferred a fixed rate of interest while 16% preferred a floating rate of interest. Thus, in the mid-car segment, it is seen that respondents preferred a stableinterest rate.

B)

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Interpretation: About 65% of respondents preferred a loan tenor of 5 years while thepreference for more than 5 years was only 5%.

As seen in the small car segment, it is seen here as well that customers prefer a 5 year loan period.

C)

Interpretation: About 65%of customers preferred a loan to value (LTV) deal of 80-90%while 16% customers preferred an LTV deal of 90-100%. Compared to the small car

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segment, a higher percentage of customers (16%) prefer an LTV deal of about 90-100%category.

D)

Interpretation: About 68% (25 out of 37) of respondents had a favourable opinion of Structured EMI payment methods.

Across the age groups of 18-50 years, about 70% of respondents preferred structuredEMI payment facilities which suited their need while 50% of respondents preferredstructured payments in the age group of 51 years and above.

E)

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Interpretation:

44% of respondents (11 of 25) preferred the Bullet mode of payment while 36% of respondents (9 of 25) preferred the Step Down mode of payment

Age Group: 18-30 years: 36% of respondents preferred the Step Down and Bullet mode of

payment each.

31-40 years: 56% of respondents preferred the Bullet mode of payment while 33%preferred the Step Down mode of payment

41-50 years: 50% preferred Step Down while 33% preferred Bullet and Step Upmode of payment each

51 years and above: The lone respondent preferred the Bullet mode of payment.

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F)

Interpretation: The three different Banks A, B and C offered differing terms of serviceswith regards to the Auto Loan.

As seen in the small car segment, similarly, 54 % preferred Bank B, 32% preferred BankC while 14% preferred Bank A.

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Age Group: 18-30 years: 69% preferred Bank B and 25 % preferred Bank C

31-40 years: 46% chose Bank B, 31% preferred Bank C and 23% preferred Bank A

41-50 years: 50% preferred Bank C, 33% preferred Bank B and only 17% choseBank A

51 years and above: 50 % chose Bank B and C each.

G)

Interpretation: A majority (78%) ranked Rate of Interest as the most important factor inselecting an auto loan.

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Interpretation: 38% chose Down payment as the second most important factor and24% chose Prepayment charges.

Interpretation: 35% chose Down Payment while 24%chose loan tenor and 19% choseloan disbursement as the third most important factor

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Interpretation: 30% chose Prepayment charges, 24 % chose loan disbursement and16% chose Loan tenor as the fourth important factor.

Overall Analysis: 78% chose Rate of Interest as the most important factor

38% chose Down Payment as the second important factor

Prepayment charges, loan disbursement and loan tenor were the other importantfactors seen by respondents as important in selecting an auto loan.

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Luxury Segment

The Luxury segment consists of cars priced above Rs. 10 lakhs. The total number of respondents was only 5.

A)

Interpretation: 80 % of customers preferred the fixed rate of payment

B)

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Interpretation: 80% of respondents preferred a loan tenor of 5 years.

C)

Interpretation: 60% customers preferred an LTV deal of 90-100% while 40% preferredan LTV deal of 80-90%

D)

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Interpretation: Only 40% of respondents preferred a structured mode of payment.E) Structured EMI Payment method:

Bullet Payment 100% (2 out of 2 customers preferred the bullet mode of payment)

F)

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Interpretation: 60% of respondents preferred Bank B while 20% preferred Bank A andC each.

G) Importance of Auto Loan Terms of Services

Rank 1: 80% (4out of 5) of respondents ranked Rate of Interest as the most

important factor. Rank 2: 40% preferred the no Ceiling on Loan Amount (2 out of 5)

Rank 3: Loan Tenor (40%) and Loan to Value Deal % (40%)

Rank4: Down Payment (40%) and Loan Disbursement (40%)

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Interpretations: Of the Total Sample Size of 107, the following interpretations wereobtained:

Insurance on Loan Cover was the most preferred option among all respondents(78%).

Discount on Vehicle Insurance was the second preference among respondents(59%).

Margin Money as Fixed Deposit was the third preference among respondents(22%).

The other cross selling features was not popular among the respondents.

Recommendations and Conclusions

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As observed from the summary of findings, 61% of respondents were customers of

small-cars, 34% preferred the mid-car segment and 5% of respondents preferred the

luxury car segment.

Small Car Segment:

1. About 76% of customers preferred the Fixed Rate of Interest. Floating Rate was only

popular among the 18-30years age group (31%). We can therefore infer that a

majority of customers are still risk averse while seeking a loan due to the current

economic climate.

2. 55% of customers preferred a loan tenor of 5 years while 58% preferred a loan tovalue deal (LTV %) of 80-90%. Therefore, customers considered a 5 year loan

period as the optimal period for an auto loan.

3. 71% of respondents had a favorable opinion of structured EMI payment methods

and responded positively if such customized payment methods were offered. The

data indicates that the younger groups of respondents (18-30 years) were more

responsive towards a structured EMI payment method which suited their needs

whereas the older groups of respondents were more averse and preferred astandardized EMI payment method. Overall, structured payments were viewed

favourably across all age groups except respondents above 51 years of age.

4. Across all age groups 67% of respondents who chose structured payments preferred

the Step Down mode of payment while 22% preferred the Bullet mode of payment.

This shows that people across age groups preferred to have a lower credit liability

over the years. Although the Step Down mode of payment meant a higher payment

in the initial years, the gradual reduction in EMI towards the end of the loan periodwas seen as a major factor for the respondents to select this method of structured

payment.

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Recommendation: As the respondents generally preferred structured payments ,

the Step Down and Bullet mode of payment should be promoted among the small-

car segment aggressively so the customers are more aware of the customized forms

of payments which suit their needs.

5. Among the choices of Banks provided to respondents i.e. Bank A, Bank B and Bank

C, 58% of respondents chose Bank B, 28% chose Bank C and 14% chose Bank A.

Bank C had the lowest interest rate among all 3 banks while Bank B offered interest

rates as per industry average and Bank A had the highest interest rate. Therefore, in

spite of Bank C offering the lowest interest rate, it was seen that customers preferred

Bank B. This indicates that customers are looking for a few more favorable service

terms other than only the interest rate.

6. A majority of respondents ranked the Interest rate as the most important factor in

selecting an auto loan. But customers were also looking for favorable down payment

charges, lower prepayment or foreclosure charges, loan tenor as well as a quicker

loan disbursement process.

Recommendation:

Bank B was the most selected option among respondents. Compared to Bank C,

Bank B had a higher interest rate but had more favorable terms of services which

included a lower down payment and a quicker loan disbursement process which

customers rated highly.

Compared to Bank A, Bank B did not offer the structured mode of payments which

Bank A offered but had offered lower prepayment charges and a lower interest rate.

Therefore, although structured payment methods were highly preferred among the

small car customers, the rate of interest was the single most defining factor which

prevented customers from opting for Bank A.

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Therefore, in order to attract a newer group of customers in this segment, the rate of

interest would need to be more competitive with industry standards, especially in

comparison to Public Sector Banks. Along with the Rate of Interest such as that

offered by Bank B, Structured Payments such as the Step Down mode and Bullet

payment would then be highly desirable among these customers.

Mid Car Segment

1. In the mid car segment (Rs. 5-10 lakhs), 84% of customers preferred a fixed rate of

payment while only 16 % were receptive towards floating interest rates. This

indicates that customers preferred a standardized mode of interest rate in this

segment.

2. 65% of respondents preferred a loan tenor of 5 years and a LTV deal of 80-90%.

16% of customers had preferred an LTV deal of 90-100% which was an increase

from those who preferred the same in the small car segment (8%).

3. 68% of respondents preferred the structured payment methods. The younger groups

of respondents (18-40 years) were more favorable towards customized payment

facilities which suited their needs whereas the older groups of respondents were

more averse to these methods.

4. In the Mid Car segment, respondents who preferred structured payment methods,

preferred the Bullet mode of Payment (44%) while 36% preferred the Step Down

mode of payment. The customers in this segment were of a higher income group

and hence, preferred the Bullet mod of payment which suited their needs. The Step

Down mode of payment would have resulted in a much higher initial payment period

and hence was not as preferred among respondents compared to the Bullet mode of

payment.

Recommendations: Respondents in this segment too, were responsive towards

structured payments than the standardized EMI option. These respondents most

preferred the Bullet mode of payment and the Step Down mode of payment to a

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lesser extent. Therefore, the Bullet Mode of payment should be targeted towards the

mid car segment customers.

5. Choice of Bank: 54 % preferred Bank B, 32% preferred Bank C and 14% preferred

Bank A. It is therefore seen that customers here were more sensitive towards to the

rate of interest offered. But again, along with a favorable interest rate, customers

also sought others service terms which would be more favorable to their needs.

6. Other than the Rate of Interest which was the ranked the most important factor

(78%), down payment, prepayment charges, loan tenor and loan disbursement were

ranked as important factors in determining an auto loan.

Recommendations:Even in the mid car segment, Bank B was preferred but a higher percentage of

customers chose Bank C in this segment compared to the small car segment.

In order to attract customers in the mid car segment, a competitive interest rate

would need to be introduced such as Bank B along with the introduction of the Bullet

Mode of payment would help in attracting customers in this segment.

Luxury Segment (Rs. 10 lakhs and above):

1. Customers in this segment preferred the fixed rate of payment

2. Only 40% of customers responded positively towards structured payments.

3. Among the customers who preferred structured payments, Bullet payment was the

preferred mode of payment.

4. 60% of Bank Customers had preferred Bank b, while 20% each had preferred Bank A and Bank C.

5. Loan tenor, LTV deal, and loan disbursement were important factors selected after

the Rate of Interest.

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Due to the low number of respondents in the Luxury car segment because of lack of

availability of respondents and time constraint factors, a more comprehensive

analysis could not be obtained.

Recommendations:

Customers in this segment would generally prefer, other than a low interest rate, a

hassle free documentation process and a higher LTV deal as indicted by the ranking

given to these terms of services. Even if customers here are offered a higher rate of

interest as per industry average, a higher LTV deal as well as a quick loan

disbursement process must be provided to these customers.

Additional Cross Selling Services:

1. Insurance on loan cover (Credit Assure) was well received among customers (78%)

2. Also a Discount on vehicle insurance was also preferred among respondents (59%)

3. The concept of keeping margin money as a fixed deposit for a 100% loan

disbursement was well received by 22% of customers.

4. The other services mentioned in the questionnaire were not that well received

among respondents.

Recommendations:

Insurance on loan product should be well promoted among car buyers to increase its

visibility and eventually it would lead to acceptance of the insurance product.

Also, a vehicle insurance discount should be provided to those customers who seek

an ICICI bank auto loan.

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QUESTIONNAIRE

Dear Sir/ Madam,

We would be grateful if you could answer the following questions honestly. Your

valuable time spared will assist us in collecting relevant data in our area of research. All

information collected will be treated as confidential. Information gathered is strictly for

research purpose.

Please tick the check boxes wherever applicable

Name (Optional): _____________________________________________________________

Age (yrs): 18-30 31-40 41-50 51 & above

Profession: Salaried Self-Employed Business

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Bullet Payment

Rear End Balloon

8) What is the type of EMI repayment facility you prefer?

Quarterly reducing Monthly reducing Weekly reducing

Daily reducing Others (Please Mention) ___________________

9) Please see the terms offered by three different Banks A, B, and C for a particular car in your price

range. As per your requirements, please tick the Bank you would most likely seek to finance your auto

loan.

Auto Loan Terms of Service Bank A Bank B Bank C

Flexible EMI repayment options Available Not Available Not Available

Loan Disbursement (in days) 1-3 days 6-8 days 10-12 days

Loan to Value (LTV) deal (%)

*(On-Road Price)90-100% 85% 80%

Ceiling on Loan Amount No Ceiling No Ceiling Rs. 10 Lakhs

Loan Tenor (Years) 7 6 5

Down Payment (%)

*(On-Road Price) 0-10% 15% 20%Prepayment Charges

*(On % of Principal Amount prepaid)5%

*(Full repayment only)2% 1%

Rate of Interest

*(as per industry average)1.0-1.5% above At Par 0.5-1.0% below

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Bank A Bank B Bank C

10) With reference to the previous question and as per your selection, please rank the 4 most Important

Auto Loan Terms of Services offered.

(Rank 1 Highest importance to Rank 4 Lowest importance)

Auto Loan Services Rank (1 to 4)

Flexible EMI repayment options

Loan Disbursement (in days)Loan to Value (LTV) deal (%)

Ceiling on Loan Amount

Loan Tenor (Years)

Down Payment (%)

Prepayment Charges

Rate of Interest (%)

11) What kind of additional services do you expect along with your auto loan? Please check the boxes

below:

Insurance Cover on Loan Margin Money as Fixed Deposit

Zero Balance Savings A/c for Self & 100% Loan Disbursement

International Credit Card

Discount on (Please select from below):

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General Insurance premium (Vehicle) Education Loan

Health Insurance premium (for self and family) Personal Loan

Life Insurance premium

Bibliography

Marketing Management - Philip Kotler Consumer Behavior Leron G. Schiffman Newspapers:

o Times of India

o Economic Times

o Financial Express

o Business standard

www.wikipedia.org www.google.com www.icicibank.com www.rupeetimes.com

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http://www.wikipedia.org/http://www.google.com/http://www.icicibank.com/http://www.rupeetimes.com/http://www.wikipedia.org/http://www.google.com/http://www.icicibank.com/http://www.rupeetimes.com/


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Pratul C Lobo_MMS Marketing - Need Analysis of Auto Loan Customers_ICICI Bank

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