Special Focus

SPECIAL FOCUS: EDUCATION BACKGROUND

The tradition of following the footsteps of their forefathers and answers were on expected lines, but there were also some interesting
entering the family business is a very strong one in India. In the past, it ones, signifying a change of attitudes.
has not been uncommon to see youngsters being drafted into the
family business at a very early age so that they can learn the ropes and First, education has become a major focus for today’s ultra HNI,
take over when the time comes. Often, such a decision has come at the irrespective of whether he is an Inheritor, Self-made or Professional;
cost of the youngster’s education. While data may be hard to come by, it more so for the Professional, as we discovered in last year’s survey.
may not be too far off the mark to say that most of the first and second
generation entrepreneurs who set up companies in the last century Some of the results that emerged were:
may have had poor to moderate schooling.
• Most ultra HNIs interviewed were better educated than their
Some may argue that it may have sufficed in those days, but would fathers and a strong correlation was identified in terms of self
it be so in today’s information age, when both operational and made entrepreneurs who were mostly from business families.
management practices have changed, due to rapid changes in the
technological landscape? • Professionals from business families too wanted to explore
opportunities and gain experience working outside their
This year, one of the key questions to which our survey sought answers traditional businesses to bring in better knowledge to their
was this: was the emphasis on education changing? Some of the traditionally run family businesses.

EDUCATIONAL BACKGROUND: FATHER VERSUS SELF Father Self

67.7% 49.3% Graduate

Post Graduate
13.5% 36.2% / Masters

9.0% 11.6% Professional

9.8% 2.9% Others

Source: T.O.P. India - Kotak Wealth & CRISIL Research

17 | T.O.P. India - Kotak Wealth & CRISIL Research

• There was also a peculiar trend of professionals who after a because it helps in the family staying together during the childhood
few years of work experience started their own successful years. For post graduation, there is an overwhelming preference for
ventures. institutions overseas, because of the apparent dearth of such high-
quality colleges in the country. “Post-graduate education should be
• Most mothers were housewives while a small number was done abroad since international universities give better options for
found to be working. specialisation than the Indian ones,” one of the parents said.

One of the most surprising findings was that boarding schools, once With a maximum of one or two children, most parents said that the
referred to as the refuge of the rich kids, is no longer as popular. Perhaps child’s education was key priority and was a “no-compromise”
it has to do with greater choice, propelled by the establishment of expenditure. In this sentiment, there is no essential difference between
equally good day schools or educational institutions in their cities and, the Inheritor, the Self-made and the Professional: all of them are equally
because of break-up of the joint families and increasing nuclearisation agreed on the importance of education in today’s world and place a
of families, the need of the parents to have their children with them in very high premium on it.
the formative years.
More pertinently, unlike parents of an earlier generation, almost all
The survey revealed that the brand name or pedigree of the institution ultra HNI parents of today strongly believe that just a graduate degree
and the curriculum were the most important factors while deciding the is insufficient even if the ultimate aim is for the child to join the family
school. But here, a very interesting difference came to light: the most business. And, in this context, overseas institutes are the preferred
important parameter while choosing the school was the choice for a post-graduate degree, for a variety of factors.
curriculum/board in the metros, whereas it was the brand name in the
non-metros. This is perhaps because of fewer branded schools in the “Apart from the top 5-6 colleges, no other institute in India is so good
non-metros and the innate need of the rich here to project an aura of for post graduate studies,” one opined.
exclusivity in their choice of school. IB/IGCSE schools are growing faster
in the non-metros, perhaps because educational service providers are “Competition to get into Indian colleges has become so tough that I
realising the unfulfilled potential in these areas. really doubt if my child will be able to get into one of the top colleges,
it’s easier to get into international universities,” another remarked.
And, more importantly, the parents were heavily involved in making
the choice of the school, with friends and immediate family being the “Universities abroad allow you to select a college based on a particular
key influencers. An important consideration in the choice of school subject you want to take up. No university in India gives you that
was that it should be one where the children felt comfortable with option,” a third added.
their peers in terms of exposure to, for instance, new subjects and
technology. Nevertheless, from the survey it is clear that increasing nuclearisation
of families is causing an attitudinal shift about study overseas. Given
Most ultra HNIs increasingly prefer to let the child study in India until the choice of an equally good domestic institution, they are quite
graduation, perhaps because they are quite comfortable with the willing to let their wards study in India, unlike the foreign focus of an
quality of such institutions in the country upto this level, and also earlier generation.

T.O.P. India - Kotak Wealth & CRISIL Research | 18

Maybe, there is food for thought there for foreign higher education
providers, or even reputed foreign educational institutions who are
contemplating entry into the Indian landscape.

BOARDING SCHOOLS, ONCE REFERRED TO AS
THE REFUGE OF THE RICH KIDS, NO LONGER AS POPULAR

Strongly Neither agree Strongly
disagree Disagree nor disagree Agree agree

My children’s minimum education should be a Post Graduation,
graduation is not sufficient

I prefer sending my children to IB / IGCSE schools rather than
CBSE / State board schools

Boarding schools provide better education and discipline

Education holds the competitive edge today over all else,
children have to study more than we did

If I have a choice between a reasonably good local college and an
average overseas college I will choose the local college only

Spending money for higher education overseas makes
sense - not for basic graduation degree



SPECIAL FOCUS: LUXURY CARS

The first car was brought to India in 1897, by a Mumbai-based Audi’s popularity too is increasing multifold across all age groups, as
Englishman with Crompton Greaves Company. Jamshedji Tata was the brand conveys a classy style statement and is equally popular
next, and was the first Indian to own a car; he was followed, quickly amongst women.
enough, by Rajas, Maharajas, Nawabs, Nizams and so on.
Until a couple of years ago, Mercedes was believed to be ahead of its
Tata had imported an Oldsmobile, but all the great names soon competitors in the luxury car segment. But in the last couple of years,
followed: Rolls Royce, Bentley, Jaguar, Daimler etc. In those early days of many luxury car makers, to grow their market share, are offering special
motor cars in the country, just owning a car represented luxury, the loan packages, group booking packages and discounts and have also
name was perhaps an afterthought. introduced a variety of models, not too different from each other in
looks or design. That strategy may have its strengths, but therein also
Today, over 100 years later, many of those named above are still present lies a weakness. On the one hand, these packages make the cars more
and represent the ultimate in luxury cars. The difference perhaps is this: affordable, but on the other, they lose their premium on exclusivity.
the USP now is not only about owning a car, but also the exclusivity it
gives to the owner. So a Rolls Royce, Bugatti, Maybach, Ferrari, Consider it from an ultra HNI’s point of view: what is the use of buying a
Lamborghini, Bentley or an Aston Martin still signify luxury, but some ‘luxury car’ like that if your neighbour also has the same make? “I would
others with numerous models at affordable price points, no longer want my car to have better features than my neighbour’s car – it is not
represent those aspirational cars. just about a particular brand anymore, it is also which car it is – like an
Audi A6 or a Q7.”
By that yardstick, our survey this year was revealing: BMW, Audi and
Mercedes are the top three aspired cars, in that order. In fact, all three Therein lies a contradiction of sorts that holds a lesson for the current
appear to have become mass luxury cars, with Audi growing the fastest leaders, if they wish to remain so and retain their luxury brand image.
in recent times. Don’t be surprised if you don’t see a Bentley or a Bugatti
in that list. That is because an aspired car here means a car that the ultra
HNI knows that he can realistically purchase in the immediate future.

BMW and Audi, according to our respondents, score over Mercedes in
terms of newer models and exclusivity in terms of both design and
value-added features (and services). Many respondents called
Mercedes as a “childhood dream car” – they said it was a car that
conveyed style and maturity, was a favourite amongst the older ultra
HNIs. By contrast, BMW and Audi were popular amongst the younger
ultra HNIs.

“Cars these days are not just about whether it is Mercedes or BMW – it is
a reflection of your personality too,” one young ultra HNI commented.


THE MOST ASPIRED CARS

BMW
Toyota
18.0% 7.8%

Audi
Honda
14.8% 6.3%

Mercedes

12.5% Ford
5.5%

Others Skoda Ferrari
< 4% *
4.7% 4.7%

* Brands including Rolls Royce, Range Rover, Land Rover, Jaguar, Hyundai,
Nissan, Mahindra, Bugatti, Beetel, Porsche, Bentley are part of the ‘Others’


MOST AVAIL OF CAR LOANS TO TAKE ADVANTAGE
OF TAX BENEFITS

70.7%
64.6% 65.0%
54.8%
45.2%
35.4% 35.0%
29.3%

Self-made Inheritor Professional Overall

Yes No

At the same time, to our question to whether they took loans to buy a Another fact that separates the ordinary Indian from the ultra HNI is the
luxury car, we elicited a surprisingly high percentage of responses in number of cars owned by the latter, to suit their diverse needs. On an
the affirmative. So, does that contradict the thought process expressed average, the Inheritor owns 3-4 cars, while the Self-made and the
below? On deeper scrutiny, we found that it did not; it was, in fact, a Professional own 1-2 cars each. Interestingly, the number of ultra HNIs
purely business like decision. It is not that the ultra HNI is not able to who owned more than 4 cars was more in the non-metros than in the
make full payment out of his own pocket and buy the car outright. metros.
Instead, they buy the car in their company’s name to avail of tax
benefits arising due to interest and depreciation deduction.


SUV STILL MOST PREFERRED TYPE OF CAR

19.1% 17.1%
5.3% 0.8%
Sports Car / Convertible / Roadster
Vintage Cars
10.5% 0.8%
Hybrids

3.3% 0.8%

Customised 5.9% 31.7%
Ultra Luxury Cars
44.1% 38.7%
SUV / Crossover

2010 2011

11.8% 10.1%

Others

The most preferred car remains an SUV/Crossover, perhaps because of preference for ultra luxury cars. This is perhaps a reflection of the
the rugged, macho image that it inspires, coupled with it being an ideal increased awareness luxury car makers have been able to create
fit for short family holidays in nearby locales. This preference is among the ultra HNIs for their models through targeted advertising
markedly higher in the non-metros compared to the metros; in the and marketing campaigns, coupled with the entry of more and more
metros, ultra luxury cars are more preferred. However, compared with luxury car makers into the country, which is leading to more intense
our survey last year, there is a dramatic rise in the competition and leaving the ultra HNI spoilt for choice.


MOST PREFERRED TYPE OF CAR (CLASSIFICATION BY PROFILE)

17.0% 18.9% 13.8%

36.2% Sports car / Convertible / Roadster

SUV / Crossover 39.6%
2.1% - -
41.4%
Vintage car

- - 3.4%

Hybrids

Ultra luxury cars
2.2% - -
31.9%
Customised
30.2%

34.5%
10.6% 11.3% 6.9%

Others

Self-made Inheritor Professional

Last year, our survey had found that Japanese brands were very German cars are becoming extremely popular among the younger
popular for regular use as they were trusted for Indian roads. ultra HNIs.


JAPANESE BRANDS REMAIN POPULAR FOR REGULAR USE

22.6% 21.1% 18.3% 13.4%

Honda Toyota

8.6% 10.8% 12.8% 10.8% 10.8% 10.5% 4.3% 7.7%

Skoda Maruti Suzuki Hyundai BMW

6.0% 4.6% 4.6% 2.3% 3.7% 3.0% 1.7%

Mercedes Audi Volkswagen Ford

Source: T.O.P. India - Kotak Wealth & CRISIL Research 2010 2011

Not surprisingly, in keeping with their lifestyle, the ultra HNI prefers to change his car frequently, to remain in vogue and give himself the opportunity
to outshine his peers.


FREQUENCY OF CAR CHANGE

Self-made Inheritor
2.3% 1.8%
13.6% 17.9%
21.4%
29.5%

30.3%
31.9%

22.7% 28.6%

Overall
1.6 %

14.0%

Professional 23.3%
6.9%
17.2%
36.3%
55.2%

24.8%
20.7%

Source: T.O.P. India - Kotak Wealth & CRISIL Research Every year Every 2 years Every 3 years More than 3 years Not fixed

Around 55 per cent of the Professionals said they change their car in more than three years; the Inheritor and the Self-made make changes more often,
as the chart above illustrates.


DECISION ON NEW CAR MADE WITHIN A MONTH

Self-made

19.1% 55.4% 23.4% 2.1%

Professional Overall
16.1% 45.2% 22.6% 16.1%
18.0% 47.4% 27.8% 6.8%

Inheritor

One week
18.2% 41.8% 34.5% 5.5%
One month

Three to six months

Six months to a year

Once the decision to buy a new car is made, it takes them, on an Style and design are the foremost features taken into account while
average, around a month to decide on the new car. making the choice, followed by driving experience and comfort. The
key influencers while making the choice are wife, parents and children.
In the non-metros, we found that parents are the key decision-makers,


SPOUSE, IMMEDIATE FAMILY KEY INFLUENCERS IN CHOICE OF CAR

%
16.r9nts
e
Pa

12 Child
.4 ren
%
22.7%
Spouse

Colleag /

11.9%
Friends
ues
Othe
rs

0.6%
35.5%
Myself


whereas in the metros both parents and children are equally involved, a In the non-metros, our respondents said that they have learnt about
reflection perhaps that the age-old tradition of parents being the head new luxury cars primarily from car dealers and to a lesser extent, from
of the family have stronger roots in the relatively smaller non-metros. family/friends. By contrast, in the metros, car magazines are the
primary source of information, followed by family/friends.


SERVICE ISSUES NOT A MAJOR FACTOR IN CHOICE OF CAR

Overall

Self-made
45.3%

54.7% 38.6%

61.4%

47.2%
51.6%
52.8%

48.4%
Inheritor Yes

Professional No


Other factors (mentioned by around 45 per cent of the respondents) maintenance contract beyond 2-3 years, providing a substitute for car
that swing the decision include service and maintenance issues such as being serviced, help in car customisation etc.
free door-to-door services, discounts on value, exchange options,


Despite campaigns by car makers, not many ultra HNIs are enthusiastic
about leasing a car. Overall, only about 31 per cent of the respondents
were favouring the idea, while the majority were vehemently against it.
Understandably so, since the pride associated with owning and
displaying a luxury car to their peers is not quite the same as leasing it.

For luxury car makers, the opportunity unfolding due to the ongoing
wealth creation and the resultant surge in the number of super rich in
India is immense. In addition to creating awareness about their
products, it is also important for them to address the Indian ultra HNI’s
tastes regarding exclusivity, service and maintenance.

At the same time, it is clear that the user is well aware of the state of
attendant infrastructure in the country. Thus, one important factor for
success would be offering the right models that are both exclusive and
simultaneously seen to be fit for the Indian landscape.

While discounts and promotions are not something that the Indian
ultra HNI is seeking by choice, they do have their part to play. As does
wooing women and children, who are increasingly playing a major role,
if not actually determining the choice of the car.


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