Summer Project Report On

NEED ANALYSIS OF AUTO LOAN CUSTOMERS

Submitted To:
ICICI Bank

Submitted By:
Pratul Lobo MMS Marketing

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

Acknowledgement
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 information and 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: 1st July, 2009 Pratul C Lobo MMS (Marketing) 2008-10

LETTER OF TRANSMITTAL

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 30th 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 S. No
1.

Topic Introduction
ICICI Bank An Overview

Page No.

5 6

2.

Executive Summary Methodology a. Problem Statement and Objectives b. Sampling Strategy Summary of findings, Recommendations and Conclusion
1. Summary of findings 2. Recommendations & Conclusions

3.

10 13

4.

15 39

5.

Appendices
1. Questionnaire 2. Bibliography 44 48

ICICI Bank

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
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 loan Beginning 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: 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 the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. A floating interest rate loan is also referred to as adjustable, variable or flexible interest rate loan. The home finance company will decide upon a base rate -- known as the floating reference rate. In such a loan, the interest rate keeps changing. So, the interest rate on the loan will go up or come down depending on how the interest rate in the 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 that property 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 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.

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.

Methodology
PROBLEM STATEMENT: To carry out a need analysis of auto loan customers and develop appropriate products/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.

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Literature Review Plan: A list of books, websites, journals and newspapers that was referred to and used for literature review is provided. 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:

Step 1

Research objectives been transformed into information objectives.

Step 2

The appropriate data collection methods were determined

Step 3

The information required by each objective is being determined.

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Step 4

Specific Questions/Scale Measurement format is Question/Scale Measurements were evaluated. developed.

Step 5 Step 6

Research objectives were transformed into The information objectives needed were information objectives. determined.

Step 7

The questionnaire and layout was evaluated.

Step 8

Revise the questionnaire layout if needed.

Step9

The Questionnaire format is finalized.

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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SAMPLING STRATEGY 1. Target Population The 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 Concorde Motors Prabhadevi (India) Limited

Brand (CMIL), Tata Motors Maruti Maruti Skoda Honda Hyundai General Motors

Spectra Motors Ltd, Goregaon Laxmi Cars Pvt. Ltd., Mira Road Autograph Cars India Pvt. Ltd, Andheri Solitaire Honda, Borivali Modi Hyundai, Goregaon Ashtavinayak Auto Private Limited, Malad

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Summary of Findings
Overview of the Sample Size:
Price Range Survey Size 1-5 lakhs 65 10-15 lakhs 5 5-10 lakhs 37

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

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As part of the questionnaire, the respondents were asked to choose between 3 different banks 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:

Auto Loan Services Flexible options EMI

Bank A

Bank B

Bank C

repayment Available 1-3 days 90-100% No Ceiling 7

Not Available Not Available 6-8 days 85% No Ceiling 6 15% 3% At Par 10-12 days 80% Rs. 10 Lakhs 5 20% 2% 0.5-1.0% below

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

*(On-Road Price)

Ceiling on Loan amount Loan Tenor (Maximum No. Of Years)

Price)

Down Payment (%) *(On-Road 0-10% Prepayment charges

*(On % of Principal Amount prepaid)

5%
*(full repayment only)

Rate of Interest *(as per industry average)

1.0-1.5% above

Results
Bank A 15 Bank B 61 Bank C 31 Tot al 107

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Interpretation: About 57% of respondents preferred Bank B which offered a competitive rate of interest across industry but offered more favourable terms of services compared to Bank C which offered a lower Rate of Interest. 29 % of customers preferred Bank C offering the lowest interest rate among the 3 banks 14% of respondents preferred Bank A which offered a higher rate of interest compared to Bank B and C, but offered far more favourable terms of services. A more detailed explanation of the consumer behaviour of auto loan customers is described with regards to the small car, mid range cars and the luxury car segment. Each of these target segments have been further analysed on the basis of the age group, income level, and profession of the respondents and their consumer preferences.

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Small Car Segment

The Small Car segment consists of cars within the price range of Rs. 1-5 lakhs. The total 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.

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This data indicates that the risk appetite of customers in the current economic situation is low across all age group categories.

B)

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)

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Interpretation: 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)

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

E)

Interpretation: Age Group 21

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 all categories while the Bullet Mode of payment (22%) was the second most preferred choice.

F)

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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:

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:

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

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

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

Interpretation: 32% ranked Loan disbursement as the fourth most important factor while prepayment charges, down payment and loan tenor were also given significant importance among respondents. Overall analysis: The majority of respondents ranked Rate of Interest (83%) as the most important determining factor in selecting an auto loan.

A low down payment was the second most preferred choice. 25

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

After the initial two rankings, responses were varied among customers so the third and fourth important factors were not as conclusive as the first two important factors.

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

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 stable interest rate.

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B)

Interpretation: About 65% of respondents preferred a loan tenor of 5 years while the preference 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)

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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 segment, a higher percentage of customers (16%) prefer an LTV deal of about 90100% 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 structured EMI payment facilities which suited their need while 50% of respondents preferred structured payments in the age group of 51 years and above.

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E)

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

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F)

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Interpretation: The three different Banks A, B and C offered differing terms of services with regards to the Auto Loan. As seen in the small car segment, similarly, 54 % preferred Bank B, 32% preferred Bank C while 14% preferred Bank A. 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% chose Bank 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 in selecting an auto loan.

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Interpretation: 38% chose Down payment as the second most important factor and 24% chose Prepayment charges.

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

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Interpretation: 30% chose Prepayment charges, 24 % chose loan disbursement and 16% 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 important factors 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% preferred an 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 and C 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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Additional Cross Selling Services

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

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 to value 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 a standardized 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 period was 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 smallcar 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): Profession: 18-30 Salaried 31-40 Self-Employed 41-50 51 & above Business

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Annual Income (Rs): Less than 1,00,000 1,00,001 4,00,000 4,00,001 7,00,000

7,00,001 10,00,000 First-Time Buyer: Yes

10,00,000 & above No

1) Which Car do you intend to purchase? _______________________________________ 2) What would be the price range of the Car you intend to purchase? (Rs. In lakhs) 1-5 lakhs Above 20 lakhs 3) What type of Rate of Interest (ROI) facility do you prefer on your auto loan deal? Fixed Floating 5-10 lakhs 10-15 lakhs 15-20 lakhs

4) What is the % of Loan to value (LTV) deal you expect for your auto loan? Less than 50% 90-100% 5) What is the Loan Tenor you expect? (No. of Years) 1 5 2 more than 5 3 4 50-70% 70-80% 80-90%

6) Are you willing to utilize flexible EMI repayment facilities if offered? Yes No

7) If Yes, please select your preference among the following flexible EMI repayment services offered. EMI services Step Up Step Down Bullet Payment

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Rear End Balloon 8) What is the type of EMI repayment facility you prefer? Quarterly reducing Daily reducing Monthly reducing Weekly 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 Flexible EMI repayment options Loan Disbursement (in days) Loan to Value (LTV) deal (%) *(On-Road Price) Ceiling on Loan Amount Loan Tenor (Years) Down Payment (%) *(On-Road Price) Prepayment Charges *(On % of Principal Amount prepaid) Rate of Interest *(as per industry average)

Bank A Available 1-3 days 90-100% No Ceiling 7 0-10% 5% *(Full repayment only) 1.0-1.5% above

Bank B Not Available 6-8 days 85% No Ceiling 6 15%

Bank C Not Available 10-12 days 80% Rs. 10 Lakhs 5 20%

2%

1%

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 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 Zero Balance Savings A/c for Self International Credit Card Discount on (Please select from below): General Insurance premium (Vehicle) Education Loan Margin Money as Fixed Deposit & 100% Loan Disbursement Rank (1 to 4)

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Health Insurance premium (for self and family) Life Insurance premium

Personal Loan

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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