FACTORS INFLUENCING CUSTOMERS

PURCHASE OF AUTOMOBILES
A BARATH (27010) P PUNITHA (27035) M VIGNESH (27056)

INTRODUCTION

The Automotive industry in our country, being one of the largest in the world, occupies a
prominent place in our Indian economy. It has a strong multiplier effect and drives the economic
growth through its deep forward and backward linkages with several key segments of the
economy. India manufactures over 11 million 2 and 4-wheeled vehicles and exports about 1.5
million every year.With an annual production of more than 2.6 million units in 2009, its’
passenger car and commercial vehicle manufacturing industry is the seventh largest in the
world. As of 2009, India is home to 40 million passenger vehicles and more than 1.5 million cars
were sold in India in 2009 (an increase of 26%), making the country the second fastest growing
automobile market in the world. By 2050, the country is expected to top the world in car volumes
with approximately 611 million vehicles on the nation’s roads. India's automobile exports are
expected to cross $12 billion by 2014. The sales for the year 2010 so far are at Rs. 45155.81 Cr
and the net profit is of all the companies put together is Rs. 2038.87 Cr.
 
Such an extraordinary growth is a result of a two major factors namely, the improvement in the
living standards of the middle class and an increase in their disposable incomes. Moreover, the
liberalization steps, such as, relaxation of the foreign exchange and equity regulations,
reduction of tariffs on imports, and the banking reforms, initiated by the Government of India,
have played an equally important role in enabling the Indian Automotive industry achieve great
heights. The institutionalization of automobile finance has also paved way for a sustainable
long-term high growth of the industry.
 
Clearly, the Indian automobile sector is on a growth track. To tap this huge opportunity, Indian
automobile companies and global automotive giants are on an expansion mode. What are the
factors that influence the consumers to buy the automobiles, passenger cars in particular? What
influences consumers to own a second car? We try to find answers to these questions in this
research.

PROBLEM STATEMENT

The variables affecting families' new-car purchases cannot be predicted easily. In order to buy a
new car, not only a person has to be able to pay for it or obtain credit, but also willing to do so.
Affordability can be easily measured by personal income.But, willingness to buy depends on
several factors like their perception of their financial situation,expectations of the future needs,
expenses, and incomes, opinions about the car market and its prices, styling and general
appearance of automobiles.To measure the willingness to buy a second car, satisfaction with
the present car owned is an important factor to be considered. Families will be more willing to
buy a new car if, other things being equal, they are dissatisfied either with the appearance or
performance of their present car.

There are various other factors which also weigh heavily on the consumer’s mind. The factors
can basically be categorized into two basic types, internal and external. The internal factors
include sex, age, marital status, prestige-category, travel attitudes, personality, lifestyle, mobility
and attitudes to styling. The external factors include brand image, market share, product origin
etc. We attempt to find the extent to which the various factors influence the consumers in their
purchase decision.

As the economy is booming, there are many people who have started to own two cars. The
factors which influence the purchase of second car vary from that of the first car. We also
attempt to find the factors which influence consumers to buy the second car.

RESEARCH OBJECTIVE

With the growth of market of passengers’ cars, the number of dealers and distributors of various
cars have also increased. Various MNC’s have started to invest in India increasing the
competition in the market. This research is done with the objective of helping these companies
focus on the consumers knowing

RESEARCH METHODOLOGY

A pilot study was done among the residents of Tamilnadu who already own a car or have the
potential of buying a car and those who have the potential of buying more than one car. The
selection of this sample was by judgmental sampling. The income and occupation of the
consumers was quite varied and care was taken to have samples with varied demographic
qualities. A questionnaire was sent to them via Google docs. The questionnaire was in two
parts. The first section contained questions to know the socio-demographic characteristics of
the person under study and the second part had open ended questions aimed at extracting the
factors that influenced or would influence them to buy a car. The results of the open ended
questionnaire was analyzed and the results were concluded.

REFERENCES

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