How India Buys A Car Today Has Changed

More Indians start car shopping online, pushing automakers and dealers to respond quickly, train staff, and use AI to turn clicks into showroom visits.

Kindly note the image have only been published for representational purposes. Photograph: Kind courtesy Gustavo Fring/Pexels

Sameer wants to buy a small SUV so on a Saturday afternoon, he browses social media and automobile websites.

Several reels, popups, and links lure him to the websites of original equipment manufacturers (OEMs). He clicks on one and is led into sharing his contact details — email and phone number.

He continues browsing for some more time, and gets a call from the dealer of a leading car OEM.

He promptly books a test drive for Sunday, and his digital query is soon converted into a physical showroom visit by the dealer who was actively monitoring online leads.

A couple of hours later, another OEM calls him, responding to the same query. By this time, Sameer has already booked his test drive and will not be available for the next few weekends for another. The process drags, and the lead goes cold.

Sameer is the quintessential Indian automobile buyer who is almost always starting his purchasing journey online and who then visits a showroom for a ‘touch and feel’ of the features he has researched.

“The life of a digital enquiry is around 20 minutes. If we capture the buyer in those first 20 minutes, great; else, we have to spend more to convert them,” says the head of sales, marketing and operations of a leading carmaker who does not wish to be named.

The logic is that the customer is sitting in front of the laptop or searching on mobile. “They like something and click on it. If there is no response within 20-30 minutes, they might move on,” says this person.

How India buys a car today has changed, and OEMs and dealers are adapting accordingly.

With technologies evolving fast, car dealers are now spending an average of ₹10 lakh a year on training — sales and service.

“There are 3,000-4,000 car dealers in the country. Some spend around ₹5 lakh, others up to ₹20 lakh (on training),” says a leading dealer who runs multibrand dealerships in eastern India.

“Assuming an average of ₹10 lakh, the overall annual expenditure on training alone is ₹300 crore to ₹400 crore.”

OEMs, too, are investing in dealer training and working to filter digital leads, besides using artificial intelligence (AI) tools to ensure better conversions.

A senior official at a leading OEM explains: “Around 5 years ago, digital enquiries made for around 10 per cent of overall queries. This has risen sharply to 45 per cent now.”

He says their company conducts monthly reviews with its dealers. “Those who spend a certain amount every month on digital marketing — say, around ₹30,000 or so — tend to do better. Otherwise, the cost of conversion goes up.”

Manish Raj Singhania, chairman, Academy & Research, Federation of Automobile Dealers Associations (Fada), says last year, they did courses for dealers with Google and Meta, and this year they have done a course at the Indian Institute of Technology Delhi for the women at Fada.

“We are in talks with a leading digital marketing agency on having a course to educate dealers on how to optimise their digital spending to ensure maximum advantage,” he says.

Force multiplier

Contrary to the belief that digital queries reduce the need for human manpower, Singhania says dealerships now have a separate vertical for such enquiries.

“There is a quantum leap in enquiries, but one has to filter those and then share the leads with the sales team,” he says. “This requires a dedicated digital marketing budget, and manpower.”

The initial view was that since the consumer is doing the research, the expense on manpower would reduce. “It has been quite the opposite,” Singhania quips.

Conversion rates, meanwhile, are improving in the digital space. According to Singhania, digital queries have a 12 to 14 per cent conversion-to-retail rate now compared to 25 to 40 per cent for physical queries.

“In a physical visit, the customer has almost zeroed in on the product and the neighbourhood dealer from whom they wish to buy. So, conversion is better,” he says.

Digital route, however, helps to target specific micro-markets, buyer profiles, and demographics, and the quantum of the leads is way higher.

Agentic AI on the job

OEMs, too, are doing their bit. A Mumbai based OEM, for example, is deploying agentic AI to clean out ‘cold leads’ from actual ones. 

“Instead of having a human agent to qualify and convert the lead, we now have an agentic AI to sift cold or long leads before the query gets directed to a human,” says the CEO of a firm. This could be ChatGPT and other AI chatbots.

“It has been about six months since we adopted it, and we have already started seeing good results. The quality of leads is improving, and this will eventually bring costs down,” he adds.

Hyundai Motor India Whole-time Director and Chief Operating Officer Tarun Garg says the digital lead generation has grown steadily — “up 19 per cent year-on-year (year to date January 2025 to August 2025), and now contributes close to 43 per cent of total Hyundai Motor India’s enquiries”.

This reflects a clear shift in consumer behaviour towards online engagement.

To enhance the digital experience for its customers, Garg says Hyundai has launched platforms such as the ‘myHyundai App’ and ‘Click to Buy 2.0’, which offer end-to-end digital experiences.

“While physical leads convert into retail at around 12 per cent, digital leads are showing an increasing conversion rate, and have now reached almost 8 per cent,” he adds.

The Hyundai website, meanwhile, engages over 6.4 million visitors a month. The company has continuously ramped up dealer and dealer-staff training, focusing on digital tools and customer-centric engagement, ensuring readiness for an evolving phygital landscape, Garg adds.

Riding tandem

Analysts agree that auto retail is witnessing significant change, with customers equipped with basic information before they visit a showroom.

“The dealer’s role is shifting from being a product presenter to a consultant who can convert high-quality digital leads into sales,” says Puneet Gupta, director, Mobility Forecast, India & Asean, S&P Global Mobility.

“We are moving to multi-fuel, multi-modal mobility solutions, and only a smart consultant can match the evolving needs since every mobility solution is not for every customer.”

Automobiles sales are no longer about merely selling a product — they are about delivering a holistic mobility solution, he adds.

This shift is visible in the sale of accessories as well. When choosing a replacement tyre, for instance, digital channels influence the buyer’s choice.

“Enhancing digital engagement is a key growth driver for our business, with digital channels contributing nearly one-sixth of total sales, and continuing to rise,” says Anil Gupta, COO for Yokohama’s Off-Highway Tyre Division and vice chairman, Yokohama India.

At the same time, he adds, “our dealer network remains critical to driving conversions. Together, these two channels form a powerful, complementary engine that is accelerating our growth”.

For auto companies, the road to success evidently lies in riding tandem.

Feature Presentation: Rajesh Alva/Rediff