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 Loans Toronto Dominion (TD) Bank Toronto-Dominion Centre, P.O. Box 1 King St. W. and Bay St. Toronto, Ontario M5K 1A2 Presented By: “The Unstoppables” Nabarun Dasgupta Mohsen Kafaei Ghaeini 1

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 2

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 3

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 4

TD Bank Customers holds a strong percentage within the license holders in Toronto Count of Respondents TD Bank Customer Valid Driving License Holders in TorontoNoYes Grand Total Yes Grand Total 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 5

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 6

Demography Pattern For The Research Age Range Of The Total Sample Size in % n=100 respondents  The majority of the population considered for the survey falls under the age bracket of yrs and 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 7

n=100 respondents Count of Respondents Annual Income <= $38000 annually Full Time StudentsNoYes Grand Total Yes Grand Total 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 8

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 RespondentsAnnual Income >$38000 but >=$55000 annually Full Time Working ProfessionalsNoYesGrand Total Yes42630 Grand Total

Count of RespondentsApproximate Budget for new car is $ $17000 Annual Income Less than $38000 annuallyNoYesGrand Total Yes Grand Total 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) 10

Relationship between the Budget of Entry Level New Car is directly related to Income Level & Occupation Status – ($17,000-$23,000) Count of Respondents Approximate Budget for new car >$17000 but <=$24000 Annual Income >$38000 and >=$55000 annuallyNoYesGrand Total Yes Grand Total 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 11

28 out of n=1007 out of n= out of n=10016 out of n=100 TD Bank’s Direct Competitor Analysis – Service Quality as Key Parameter 12

Relationship between Service Quality offered by TD Bank & Prospective Customer Base for Auto Loans Count Plan to avail auto loan from TD Bank Highly Satisfied/Satisfied with service provided by TD BankNoYes Grand Total Yes27835 Grand Total 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 13

n=100 respondents Tenure of Relationship of Customers with their Banks  Two most important tenures are >= 3 Yrs & <= 6 Months  Most vulnerable to competition 14

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 15

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 16

Count of RespondentsNot Aware about auto loan provided by banks Longevity of banking - more than 3 yearsNot AwareGrand Total Yes10 Grand Total10  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 17

Count of RespondentsNot Aware about auto loan provided by banks Longeivity of banking - less than 6 monthsNot AwareGrand Total Yes77 Grand Total77 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 18

n=100 respondents Top 3 Criterions - Purchase Intent – Auto Loans from Banks 19

n=100 respondents Top 3 Criterions - Purchase Intent - Auto Loans from Automobile Manufacturers 20

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 to win over competition by offering complementary products & services 21