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Research Analysis On Consumer Behavior For The First Time Owners Of Entry Level New Cars In Toronto Opting

For Auto Loans

For – Asset Management & Credit, Auto LoansToronto Dominion (TD) Bank

Toronto-Dominion Centre, P.O. Box 1King St. W. and Bay St.

Toronto, OntarioM5K 1A2

Presented By:

“The Unstoppables”Nabarun Dasgupta

Mohsen Kafaei Ghaeini

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Research Objectives

Identify the demographic, income and psychographic pattern of the consumers who are the first time buyers for entry level cars of Toronto

Analyze the major factors influencing the purchase intent of potential customers for auto loans

Comparative analysis between major operative Banks of Toronto and Automobile Manufacturers having internal finance companies

Analyze the market potential for TD Bank for venturing in the sector of Auto Loans and understand what are the strategies required to compete and have a strong foothold in the market

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Methodologies Applied

Descriptive Research

Total sample size considered for the survey is of 100 respondents

Portfolio of the sample size – full time students or full time employees / self employed

Segment of population considered within age range of 20 yrs -30 yrs & 30 yrs - 40 yrs

Preferred price range for first new car - $11,000/- to $24,000 by the respondents

Range of income - Min $38000/- for 20 yrs to 30 yrs & Min of $55,000/- for 30 yrs to 40 yrs

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Hypothesis

Primary data was collected with dedicated questionnaire on the consumer behavior for auto loans provided by banks and automobile manufacturers

Survey was done using physical questionnaires at different locations within Toronto area

Secondary data was collected from Govt. of Canada portal and Marketline

Secondary data was utilized to identify the major manufacturers having the option of entry level cars as their category, considering the utility and the pricing of the vehicle

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TD Bank Customers holds a strong percentage within the license holders in Toronto

78%

20%

2%

License Holders - Ontario

YesNoAppearing for driving test in < 3 months

Count of Respondents TD Bank Customer

Valid Driving License Holders in Toronto No Yes

Grand Total

Yes 43 35 78

Grand Total 43 35 78

Opportunity for TD Bank

35 out of 78 respondents who have valid license holders are with TD Bank

45% of the license holders are TD Bank customers

Potential internal customer base for TD Bank is well defined

Total license holders percentage shows the potentiality of the market for Auto Loans

n=100 respondents

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Mazda Honda Toyota Kia Lexus Ford VW Suzuki GM Acura Nissan Mercedes Audi BMW0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

5.30%

13.33%

17.00%

6.33%5.00% 5.30%

10.66%

2.30%

8.00%

2.60%3.66%

6.30%5.30%

8.60%

Top Of Mind Recall For The Major Automobile Manufacturers In Toronto

n=100 respondents

Top 3 manufacturers identified are Toyota – 17%,Honda – 13% and Volkswagen – 11%

Most of the automobile manufacturers have internal finance companies, the top 3 brands also have a strong auto finance presence

Research suggests to have a win – win situation,TD Bank should create business terms with the major automobile manufacturers , for e.g. appoint dealers as agents of auto loans and give a decent payout, to have the mutual interest

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Demography Pattern For The Research

18 to 23 Yrs 24 to 29 Yrs 30 to 34 Yrs 35 to 39 Yrs 40+ Yrs Prefer Not To Answer

0

5

10

15

20

25

30

35

40

45

50

46

27

12 7 6

2

Age Range Of The Total Sample Size in %

n=100 respondents n=100 respondents

The majority of the population considered for the survey falls under the age bracket of 18-23 yrs and 24-29 yrs as per the planned methodology

The aforesaid age bracket is very important since the probability of an individual in Toronto purchasing the first new car is the highest

Research also shows that the aforesaid age bracket are mostly under the two broad categories of occupation status i.e. Full Time Student or Full Time Working Professional/Self Employed

Full T

ime W

orking P

rofes

sional

Full ti

me Studen

t

Part-time w

orking p

rofes

sional

Part-time s

tudent

Others plea

se sp

ecify

41%51%

8%0% 0%

Occupation Status

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Less than $38,000 annually

$38,000 to $43000 annually

$44,000 to $49000 annually

$50,000 to $54,000 annually

More than $55,000 annually

Prefer not to answer

0% 5% 10% 15% 20% 25% 30% 35% 40%

34%

0%

8%

6%

24%

28%

Annual Income Level

n=100 respondents

Count of Respondents Annual Income <= $38000

annually

Full Time Students No YesGrand Total

Yes 12 22 34

Grand Total 12 22 34

Relationship of Full Time Students = 51% of the total sample size of 100 respondents and their income level Full Time Students comprises of

51% of the total sample size

34% of the annual income level is within $38,000

22 out of 34 full time students fall under the mentioned income level

65% of the full time students earn within $38000 annually

Purchase intent of this category is important for TD Bank

Annual income level has a major influence on selection of new car for the students

Annual income plays a major role to decide their budget

TD Bank has the opportunity to cater their needs since they have low income potential

9

Less than $38,000 annually

$38,000 to $43000 annually

$44,000 to $49000 annually

$50,000 to $54,000 annually

More than $55,000 annually

Prefer not to answer

0% 5% 10% 15% 20% 25% 30% 35% 40%

34%

0%

8%

6%

24%

28%

Annual Income Level

Relationship of Full Time Working Professionals/Self Employed = 41% of the total sample size of 100 respondents and their income level

Full Time Working Professionals comprises of 41% of the total sample size

38% of the annual income level is >$38,000 & >=$55,000

26 out of 30 full time employees fall under the mentioned income level

86% of the full time employees earn >$38,000 & >=$55,000

Purchase intent of this category is important for TD Bank

Annual income level is important since this category is the most probable to buy their new car

TD Bank has the opportunity to cater their needs since they have buying power and suitable credit history

n=100 respondents

Count of Respondents Annual Income >$38000 but >=$55000 annually

Full Time Working Professionals No Yes Grand Total

Yes 4 26 30

Grand Total 4 26 30

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$11,000 to $17,000$17,000 to $23,000

More than $24,000

43%

33%

24%

Budget for Entry Level New Car preferred by consumers out of their annual income

Count of Respondents Approximate Budget for new car is $11000 - $17000

Annual Income Less than $38000 annually No Yes Grand Total

Yes 10 24 34

Grand Total 10 24 34

n=100 respondents

Full Time Students dominated the budget preference of $11,000 to $17,000

Income Level had the direct influence on budget

Budget played the major role on selection of Car Brands

TD Bank has the opportunity to cater this young segment of population

The preferred Low Budget creates opening for TD Bank to diversify and Used Car Loans

Relationship between the Budget of Entry Level New Car is directly related to Income Level & Occupation Status – ($11,000-$17,000)

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Relationship between the Budget of Entry Level New Car is directly related to Income Level & Occupation Status – ($17,000-$23,000)

$11,000 to $17,000$17,000 to $23,000

More than $24,000

43%

33%

24%

Budget for Entry Level New Car preferred by consumers out of their annual income

Count of RespondentsApproximate Budget for new car >$17000 but <=$24000

Annual Income >$38000 and >=$55000 annually No Yes Grand Total

Yes 10 28 38

Grand Total 10 28 38

n=100 respondents

Full Time Professionals/Self Employed dominated the budget preference of $17,000 to $23,000

Income Level had the direct influence on budget

Higher Level of Income increases the flexibility of the segment

TD Bank has the opportunity to cater this potential segment to Up Sell & Cross Sell other services

Higher probability of fitting into the target audience of TD Bank, because of decent credit history

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Don’t Like it at all

Don’t Like it Don’t Know Like It Like it very much

0%

4%2%

5%

17%

CIBC Bank - Consumer Feedback on Service Quality

28 out of n=1007 out of n=100

Don’t Like it at all

Don’t Like it Don’t Know Like It Like it very much

0% 0%

4%

7%

4%

RBC Bank - Consumer Feedback on Service Quality

14 out of n=100

Don’t Like it at all

Don’t Like it Don’t Know Like It Like it very much

0% 0% 0%

5%

2%

Scotia Bank - Consumer Feedback on Service Quality

Don’t Like it at all

Don’t Like it Don’t Know Like It Like it very much

0% 0%

4%

12%

2%

BMO- Consumer Feedback on Service Quality

16 out of n=100

TD Bank’s Direct Competitor Analysis – Service Quality as Key Parameter

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Relationship between Service Quality offered by TD Bank & Prospective Customer Base for Auto Loans

Don’t Like it at all Don’t Like it Don’t Know Like It Like it very much

0% 0% 0%

12%

23%

TD Bank - Consumer Feedback on Service Qual-ity

CountPlan to avail auto loan from

TD Bank

Highly Satisfied/Satisfied with service provided by TD Bank No Yes

Grand Total

Yes 27 8 35

Grand Total 27 8 35

35 out of n=100

Best in Service Quality

NIL Dislikes

High Customer Retention Potential

Loyal Customer Base

Explore Customer Needs for Auto Loans

Cross Sell & Up Sell

Service wins over Auto Dealers

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Less than 6 months

6 months to 1 year

1 year to 3 years

More than 3 years

13%

9%

22%

56%

Longevity of current service choice of customers from their Operating Banks

n=100 respondents

Tenure of Relationship of Customers with their Banks

Two most important tenures are >= 3 Yrs & <= 6 Months Most vulnerable to competition

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Yes7%

No78%

Not Aware 15%

Consumers Response to take an Auto Loan from their Primay Banks

n=100 respondents

Consumers Response to avail Auto Loans in the forthcoming 3 Months from their Banks

Decision to avail Auto Loans was directly related to purchase intent of a new car within 3 months 15% Unaware whether their respective Banks provide auto loans Research suggests TD Bank should increase awareness both for their existing customers & competing bank’s customers

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Yes47%

No34%

Not Aware 19%

Consumers Response to take an Auto Loan from their auto-mobile manufacturers

n=100 respondents

Consumers Response to avail Auto Loans in the forthcoming 3 Months from Automobile Manufacturers

Decision to avail Auto Loans was directly related to purchase intent of a new car within 3 months 19% Unaware about the fact that automobile dealers have their own financing Research suggests TD Bank should tie up with the popular dealers and appoint them as agents

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Less than 6 months

6 months to 1 year

1 year to 3 years

More than 3 years

13%

9%

22%

56%

Longevity of current service choice of customers from their Operating Banks

Count of Respondents Not Aware about auto loan provided by banks

Longevity of banking - more than 3 years Not Aware Grand Total

Yes 10 10

Grand Total 10 10

Low awareness level within the vintage customers

TD Bank should focus on increasing awareness level on lending options

Lack of focus on customer base might lead to loosing a prospect to competitors

n=100 respondents

10 out of 35 customers for TD Bank

Relationship of longevity >= 3 Yrs and the awareness level for TD Bank Customers

18

Less than 6 months

6 months to 1 year

1 year to 3 years

More than 3 years

13%

9%

22%

56%

Longevity of current service choice of customers from their Operating Banks

Count of Respondents Not Aware about auto loan provided by banks

Longeivity of banking - less than 6 months Not Aware Grand Total

Yes 7 7

Grand Total 7 7

n=100 respondents

7 out of 35 customers for TD Bank

Relationship of longevity <= 6 months and the awareness level for TD Bank Customers

Low awareness level within the new customers

TD Bank should focus on increasing awareness level on lending options

Lack of focus on new customer base might lead to loosing the customer to another bank

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31%

18%

11%

16%

11%

13%

Top 3 Criterions - Purchase Intent - Bank Funding

Low Rate of InterestFlexible Tenure of the LoanPart Payment OptionSpeed of ApprovalCustomer ServiceBenefit of maintaining Healthy Re-payment

n=100 respondents

Top 3 Criterions - Purchase Intent – Auto Loans from Banks

20

19%

26%

17%

15%

10%

13%

Top 3 Criterions - Purchase Intent - Captive Finance - Automobile Manufacturer

Low Rate of InterestRelaxation on Credit RatingsBuy Back Option/Exchange Flexible Tenure of the LoanCustomer ServiceSpeed of Approval

n=100 respondents

Top 3 Criterions - Purchase Intent - Auto Loans from Automobile Manufacturers

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Recommendations

TD Bank Auto Loans Team

Improved Credit Policies

Spread Awareness Within Customer

Base

Pre-Approved Auto Loan

Used Car Loans

Auto Loan Overdraft Limit

Loyalty Credit Cards to Auto Loan

Customers

Research suggests TD Bank to constantly innovate and open up new sectors for Auto Loans towin over competition by offering complementary products & services