Table of Content
2.0 SCOPE OF THE STUDY
2.1 Research Aim
2.2 Research Purpose
2.3 Research Objective
3.0 LITERATURE REVIEW
3.1 Rise of automobile industry in UAE
3.2 Current automobile growth in UAE
3.3 Barriers in growth in the automobile industry
3.4.Brand value among consumers
3.5 Driving factors influencing consumers decision in purchasing cars
4.0 RESEARCH METHODOLOGY
4.2 Research Objectives:
4.3 Research Philosophy
4.4 Research Phases:
4.5 Data Collection Methods:
4.5.1 Secondary research data
4.5.2 Primary Research
4.5.3 Questionnaire Design
4.6 Sampling Method:
4.6.1. Population and Sampling Frame
4.7 Research Instruments:
4.8 Data Analysis and Interpretation:
4.9 Limitations of The Study:
5.0 DATA ANALYSIS
5.1 Simple Percentage Analysis for Demographic Variables
6.0 CONCLUSION AND RECOMMENDATIONS:
List of Tables
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List of Figures
1- Automobile Growth in UAE
2- Brand Value Car Manufactures in UAE 2017
3- Statistics chart on consumer car buying decision
4- The research process
5- Pie chart on gender
6- Pie Chart on age
7- Statistic chart on Martial Status
8- Pie chart on Nationality
9- Statistic Chart on Educational Qualification
10- Statistic Chart on Employment Status
11- Statistic chart on place of stay
12- Statistic chart on place of work
13- Pie chart on car as fashion
14- Statistic chart on Different purchasing sources
15- Statistic chart on what others think about your car
16- Statistic chart on family suggestions on purchasing car
17- Statistic chart in Purchase and brand choice
18- Statistic chart on Vehicle usage
19- Statistic chart on Car ownership
20- Statistic chart on factors influencing in buying new or used cars
21- Statistic chart on Types of cars people would consider driving
22- Statistic chart on Kinds of payments people prefer buying a car
23- Statistic data on Recommending cars to their friends
Purchasing a car is the second most important and expensive investment in everybody’s life after purchasing a house. Consumers have created a strong car brand image of different car brands and will keep on increasing in upcoming years. This dissertation describes and shows the issues or factors which arises when people decide to purchase a car in UAE. Different Industries and services which is linked to car industry segments plays a major role in the economy. Different types of models and technologies have been invented by different car companies which made consumers to afford different choices and make them way luxurious better than before. The financial risks and personal taste and preferences shows the amount of effort the buyers put when buying a new car. This essence of a high involvement purchase decision is often the purchase of a new car Customers attitude is not easy when buying a car, it varies according to high state of social and mental contributions. People settle on their choice by looking every single alternative which is worth their interest and cost. The buying procedure of cars are affected by various factors such as their income, cars taste and preferences, instalment choices, maintenance costs and in addition to fuel costs. The buying behaviour is also affected by many mental factors such as observations, inspiration from loved ones, and trust towards the brand. About different brands, individuals also try to take different information’s from companions and associates. Car manufactures need to consider different financial factors which impacts the buyers like loan costs, income and rise in fuel costs. In such a way all car makers should make cars according to the needs of the buyers. The objective of this study is to find out the factors that influence consumer buying behaviour towards vehicles in the UAE perspective
Chapter 1 - Introduction
Different car brands in UAE plays huge impact on the purchasing decisions of a consumer. Also different features by owning them and using a brand will influence the taste and preferences towards a particular brand and increases the reputation of the car manufactures. In this innovative world, new designs and different technologies is flourishing in the market. This leads to different choices and incredible offering to the customers. In UAE due to less petrol prices and high per-capita income, UAE has become one of the place for car enthusiasts and the buyers in this country. Importing cars also common due the less tax to be paid compared to other countries. Eventually consumer behaviour in buying cars has become dynamic in nature. Frequently changing cars has been a trend in UAE.Customers buy a particular car out of curiosity and change once they get bored of it. The used car business also has a high business in UAE, and plays a major contribution to the UAE car industry.UAE is the second largest automotive market in the GCC after Saudi Arabia.UAE mainly focuses on imports of all light vehicles. In UAE other than assembling, armoured vehicles, and some automobile concept factories, there is no big manufacturing process taking place in the UAE.The UAE automobile sector is dynamic and innovating sectors. The UAE continues to offer variety of opportunities in manufacturing of cars. Devel 16 and Lykan Hyper sport are examples of UAEs own Sports cars. Different Governments investment policies helped manufacturing to increase their demand for different vehicles over a long term and helped in a growth in automobile sector. The industry is considered to be most important in UAE.With the increase in different income groups and very easy financial help from different financial organizations, the UAE car consumers have a lot of options to choose from. The option of choosing a particular brand depends on the Behaviour of the consumer. The different buying behaviour of the customers can be studied by understanding their perceptions about the cars in the market. Buyers who have a place with a higher social class are probably going to incline toward a specific sort of vehicles which they would believe would provide all specifications for their requirements. So also the obtaining choices of such customers would likewise be depending upon the age gathering. This highlights more youthful purchasers are in search for cars may not be the same with more seasoned customers. Other demographic factors like wage, education and occupation. The car business has the chance to shape this essential innovation. When considering these techniques and plans of action, car companies tried to consider coordinate car buyers as well as all people relating to it to get appropriate data. The car has been there for a long time, modified and adjusted to became a social status in the economy, it ensures our own interest and social interests. All the factors are considered to effectively influence the different consumer choices and needs.
Chapter 2 - Statement of Problem
2.0 Scope of Study
2.1 Research Aim
Today, the world population has grown and so has the drive for being independent. Mobility is an aspect which are nailed to their in-depth core and has become a necessity as to be a part of this fast paced industry. The aim of this research paper is to understand the rise of car industry and the consumer’s factors involving in purchasing a car based on UAE. Is the brand more noteworthy or comfortableness pay high value or is it the simple but most complicated factor, price playing a great factor when coming to purchasing a car. This research paper focuses on those factors and will help to analyse the data for the most common reason.
2.2 Research Purpose
The purpose of this research is to do an exploratory study on car industry and to understand the consumer buying behaviour. This paper can effectively help many first timers in understanding the car market and to effectively take a decision on what, when and how to buy a car.
2.3 Research Objective
Purchasing a car and the added cost to effectively maintaining it is a hassle. The consumer therefore looks at every angle before owning a car of their own. The objective of this study therefore is to find out the factors that influence consumer buying behaviour towards national or international cars in the UAE perspective. This research will also focus on these pointers given below as well:
- The rise of automobile industry, mainly focusing on UAE
- Barriers to future automobile growth in UAE
- Consumer’s take on Brand value while purchasing a car.
- Lastly, the driving factors influencing consumer’s decision in purchasing vehicles.
These objectives which are focused here will help the customers evaluate their decision and may help the process of owning a car make flawless. The intended purpose of this research as stated above is to help the customers reach a decision on purchasing a car which will eventually help them in attaining a social standing and to effectively create a profile of their own.
Chapter 3 - Literature Review
3.1 Rise of car industry in UAE
With different brands well represented, ease of different financial plans and running costs, most of the people buy their dream cars in this country where they can only dream in their own country. The automotive industry in UAE also grow when the country grew, Brands like Toyota Land Cruiser, Nissan Patrol and Range Rover were once the kings of UAE roads when most of the landscape was desert and the road connectivity was a tough situation.
Since early 1900s, when the automobile industry became as a well organised sector, it has been going through some serious changes in terms with one or more factors like improvement in large-scale manufacturing capabilities, innovations in engineering and design, Different regulations on emissions, usage of various marketing strategies and price of oil.
However, over the next decades, technology and consumer driven type of trends will be followed by automobile industry and this will pattern a different shift in terms of services delivery models and different products.
3.2 Current car growth in UAE
Automobile sector has been developing and opening up different developing markets. The car business is currently being faced with new and big challenges. Globalization, digitalization and different expanding rivalries in the market are changing the process of business. It says that more than 150 car manufactures will take part in Dubai International Motor Show by 2020 and sales will reach by 267,000. A recent report says that number of passenger vehicles will grow at 5% from an estimation of 10.2 million to 13.2 million expo 2020.The study also says that new car sales will hit 1.4 million by 2020 compared with 1.2 million in 2015.One of the best growth of UAE automobile industry was building up its own supercar called Devel Sixteen with 5000-brake horse power and UAE also started focusing on manufacturing track based racing cars. With the UAE, the main country for highest number of luxury cars by per capita, studies show that the global luxury market by Report Buyer estimated that sales of all luxury cars in UAE would grow between 4-5% in the coming years.UAE consumers love towards different cars increased confidence by increasing regions per capita will beat all market performance in other areas of the world.
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Figure 1 Automobile Growth in UAE, Source-(Dubai International Motor Show,2017)
3.3 Barriers to growth in the car industry
Few of the factors which act as barriers for the growth of auto industry in the United Arab Emirates are:
1. Risk of shared mobility
In many developed and emerging markets, different congested urban spaces, high cost of ownership and different tolls(salik) has driven people to move towards shared mobility Services such as Kareem, U-drive, Zipcar, lyft, and Uber are becoming popular nowadays. With all these services people no need to worry about parking, maintenance etc. Even in Dubai, the RTA has launched a shared mobility called Sharekni, a car pooling type of app. Increase in shared mobility will have a huge impact on car ownership. The global car ownership rates will rise, but they will increase by a moderate of 2% per annum in 2015-2030 of time. And by 2030 revenues from these shared mobility services will go up to 5.5 trillion Dhs globally
2. Smaller, Quieter, Cheaper
Over the last decades, Government has been playing a huge role in reducing car emissions. This type of move such as leaded petrol to unleaded fuel and from natural aspirated big cylinder engine has high emission norms should be followed. Along with these norms, there are many environmental problems, which is leading to the development of hybrids, and electric cars, making existing car makers to bring out new models to compete with car makers like tesla and redesign their products. By 2030 electric cars will be form around 15% of new vehicles sales, because adoption is quite high in this country. Even the UAE government who supports various automobile manufactures also supports in use of electric cars. For e.g. RTA kept target of 4750 hybrid taxi cars by 2021.They even provide free insurance, free charging to consumers who buy electric cars.
3. Tax barriers
Owning a car in the UAE is a significant choice since it includes numerous costs including fuel, insurance, and parking for those UAE occupants who were attempting to make sense of chance that they can bear to own a car, this choice has turned out to be much more difficult after the implementation of significant Value Added Tax(VAT).
The utilization of VAT relies upon whether you are purchasing from the agency or dealer or specifically from an individual owner. In the event that you are buying a fresh out of the box new car from the showroom, or a dealer, at that point you'll need to pay 5% VAT on the cars value. The decision is still out on how it will be connected, as it can either be 5% of the RSP (Recommended selling price) or the genuine invoiced sum (which could be marked down). Then again, purchasers of used cars still enlisted under the first owners however being sold through owners should pay 5% on the benefit the car owners. No VAT applies to car loans and the related financing costs starting at yet. Most banks have not changed their loan costs either, which implies the banks will assimilate any utilization of VAT for the present. Be that as it may, bank advance preparing charges, more often than not in the scope of Dh500-1,500 are liable to 5% VAT. While the VAT does not make a difference to car permit enlistment and assessment charges (Tarkhees), the costs were expanded multi month prior. The car permit renewing charge was expanded by 17% from Dh300 to Dh350, and the assessment expense went up by more than 20%from Dh140 to Dh170 in December 2017. You start to likewise spending plan for a 5% VAT on your auto insurance and reinsurance. Dubai people are currently confronting higher utilization costs in light of the fact that 5% VAT applies to petroleum, diesel and other oil and gas items at the pump. Salik labels and recharge cards are excluded from VAT. Car Maintenance has turned out to be costlier as 5% VAT is likewise material on occasional repairing, including oil change, car wash at the service station, and so forth. It even applies to car service centres and buy of extra parts.
4. Automated driving
Most of the cars today are equipped with lot of advanced driver system(ADAS) and by 2030 it is expected that 15% of all new cars will be fully autonomous. This will bring in a collaboration between the automobile industry and the IT industry. It will also have an impact on manufacturing process, new service capabilities and also launch of new models which will have auto update or on-air updates using satellites.
5. Hyper-Connected Customer
Customers today liked to be connected 24/7, even while they are travelling. In automobiles connectivity is largely limited to navigation and voice and different media streaming. But people nowadays are looking for full specifications between their mobile and tablets in car consoles. With more cars having lot of autonomous features, it will have less freedom to utilize the time and other activities. Studies say that one third of customers will jump to manufacturer who provide full connectivity to applications, data and medias. Some of the manufactures like Volkswagen in UAE comes with full feature of connecting to all apps on the cell phone and even read and send messages. Changing consumer’s different mobility needs, various regulations, higher automation and different connectivity in cars will create a significant disruption in the automobile industry. Because of these features companies like UBER will have opportunities for development of new and variety revenue models. Navigating to these disruptions will require a mind to change in car manufactures from hardware suppliers, they need to become integrated mobility service providers.
3.4 Brand value among consumers
In the present creating and advanced world, consumers have ruled every one of the parts of life. The life in the general public takes after the example of the entrepreneur culture where the human qualities have an alternate measure, 'you are known by what you have not by what you are'. This normally prompts the life in a general public where everybody needs to have a one of a kind place in the general public, by having the things which separates them from whatever remains of individuals in the general public.
At present, the Brands not just speak to the image of the organization or item however to a bigger degree characterize the general existence of a man. What the individual uses can mirror his essence of life, his status in the general public, his financial foundation and numerous different things. This makes a profound association between the organization and its image, with the buyer. In this two-way connection both are subject to each other for different diverse reasons. In the present time clients are profoundly associated with the brands. When they buy any item like a car, portable, things of day by day require, mark name impact the shopper's decision. A few clients buy the particular marked things only because of the brand name. Clients trust that brand name is an image of value.
“A brand is a name, term, sign, symbol or design or combination of them, intended to identify the goods and service of one seller or group of sellers and to differentiate them from those competition”. Brand is a blend of name, image and outline. Brands speak to the client's recognitions and belief about execution of the item. The intense brand is which lives in the soul of the shopper. Brands contrast in the measure of intensity and worth they have in the commercial centre. A few brands are generally obscure to the clients in the commercial centre while then again a few brands indicate high level of mindfulness. The brands with high mindfulness have an abnormal state of worthiness and clients don't decline to purchase such brands as they appreciate the brand implementation. A few brands praise abnormal state of brand devotion. The brand history reveals to us how the general population have utilized the brand as a sign of recognizable proof. In the prior circumstances the brand stamp was utilized to separate the products of one maker to others.
Brand loyalty indicates client inclinations to buy a specific brand; clients trust that the brand offers the charming highlights, pictures, or standard of value at the correct cost. This conviction and confidence of the client turns into a base for new purchasing propensities. At first clients will buy a brand for preliminary, in the wake of being fulfilled, clients will continue purchasing the item from the specific brand. Brand reliability speaks to an empowering approach towards a brand bringing about standard buy of the brand after some time.
Brand name mindfulness assumes a vital part in basic leadership of a shopper; if client had officially heard the brand name, the client would feel more good at the season of settling on choice. Clients don't want to purchase an obscure brand. In this manner organizations' solid image name is a winning track as clients pick their image over obscure brand.
From the figure 2, Toyota is the most prevalent brand valued and perceived in the UAE, as well as most different parts of the world. Toyota likewise remains the world's greatest automaker. They have won purchaser's trust by making practical, eco-accommodating and solid autos with present day wellbeing highlights. From fuel effectiveness to rough terrain seethe, Toyota exchanges your vehicles that give genuine worth of your cash. Individuals who have claimed Toyota cars would realize that they render in excess of 400,000 miles of friendship, if looked after legitimately. Their rides are worshiped everywhere throughout the Middle East.
The way that Toyota is went down by its luxury image, Lexus, gives the organization an incredible preferred standpoint, in a locale ruled by Sports Utility Vehicles. The deserts fill in as an experience drive for devotees with various desert garden giving a perfect excursion point to family visits. To appreciate in the searing desert warm, it takes a lavish lodge that has a flawless situation control framework, perseverance to sand landscapes and ground-breaking arrangement. Other than Toyota's own particular Land Cruiser and Prado; the Lexus LX, NX, GX give you a lot of decisions to choose the extravagance most appropriate to your necessities.
Regardless of whether it is the Camry or the Corolla, the two cars are driving the brand as far as deals and dependability. The Corolla keeps on being the smash hit display on the planet with record deals over the most recent couple of years, driving the graphs in Emirates throughout the previous two years too. As indicated by Polk information from IHS Automotive, 1,098,524 Corollas were sold universally in 2013 alone. The tale of Prius is the same, the top rated cross breed auto all things considered. Toyota is driving by contracting more than one fourth offer of the market. In UAE itself most of the citizens in UAE prefer Brand value for Toyota especially for Toyota land cruiser, The Toyota Land Cruiser is to a great Brand degree well known in this Gulf country. UAEs jump at the chance to purchase the essential choice of the SUV, and afterward pimp it out with their own particular customizations.
3.5 Driving factors influencing consumer’s decision in purchasing cars.
According to drive.com (2010), the main factors impacting the buy of new or used car were mileage/ecological (45%), unwavering quality (54%), brand (36%), value/esteem for cash (36%), execution/motor power (29%), safety (28%), outside appearance (25%), riding and driving comfort (19%), modest to benefit/repair (17%), and interior space (14%). Today, the primary attributes buyers say something their vehicle buy choice incorporate mileage, price tag, maintenance and solid quality, safety, performance and individual or family needs.
As far as esteem unwavering quality, shoppers view a vehicle as dependable on the off chance that it is probably going to have less issues than different vehicles (Consumer Report, 2010). Vehicle unwavering quality has been found to positively affect the shoppers' probability of picking a vehicle (Woods et al, 2010). Unwavering quality and quality are interrelated, seen quality has coordinate effect on client buy choice and brand devotion particularly amid the time clients have less or no data of the items that they will buy (Armstrong and Kotler, 2003). In addition, unwavering quality is one of the criteria to be considered for vehicle decision (destoop.com, 2010). Shoppers need their vehicles to be both dependable, easy to keep up and to repair. The advantages that shoppers find in purchasing a vehicle with high unwavering quality incorporate lower expenses of repair and higher resale esteem (BuyingAdvice.com, 2007). In this manner, buyers are probably going to be worried about vehicle dependability while inquiring about their up and coming vehicle purchase.
Also, buyers pick a brand they perceive, contrasted with a new brand. In particular enterprises like car, brand is the leader in deciding a buy for both transported in and household cars. Customarily the market for extravagance brands was thought to be for the ones between the age of 30 and 50 yet now more youthful individuals are entering the market (Cheong and Phau, 2003). It is fundamental for the advertiser to see how purchasers think and esteem an item. There has been a tremendous increment in the extravagance advertise (Sriviroj, 2007) and endeavours are being made to draw in the young through various showcasing methodologies. This is on the grounds that adolescent is defenceless and can without much of a stretch be pulled in by publicizing and advancements. They have higher expendable salaries towards spending on luxury. Along these lines, it is demonstrated that individuals purchase autos for a wide range of reasons, for example, energizing styling, front line safety innovation, or a renowned brand. In any case, a notoriety for dependability is critical to pretty much every purchaser. Great quality drives an upright hover in car industry execution. The more dependable an organization's autos, the more individuals will pay for them, which makes it less demanding to offer without colossal rebates and yields more cash to manufacture better autos. As per the David Champion (2010), Senior Director of Consumer Reports auto test tasks, he expressed that it doesn't take long to lose a decent notoriety, however it takes five or ten years to increase one. Along these lines, unwavering quality is basic to decide the notoriety of the car organizations.
As far as safety, buyers view safety as a standout amongst the most imperative contemplations in purchasing another or utilized vehicle. The vehicle safety exhibitions are evaluations before buying a vehicle (Harris, 2001). Moreover, purchasers are progressively looking for safety includes in their vehicles (Deloitte, 2010) and will pay more for a vehicle to get enhanced wellbeing levels (Harris, 2001). Besides, the Deloitte consider likewise anticipated that the current monetary emergency will leave clients to esteem vehicle safety more than previously and look for vehicles with upgraded wellbeing highlights. Purchasers' expanding interest for safety has driven producers to think and create safety related advancements and highlights, (for example, programmed crash warning, crisis help, and remote vehicle diagnostics) in their ongoing models (Deloitte, 2009; Dannenberg and Burgard, 2007).
Fuel economy is as essential a factor in a purchaser's decision of vehicle as are wellbeing and dependability. The effect of unstable gas costs can be found in all business sectors, with nine out of 10 respondents indicating efficiency as an essential or vital thought in their vehicle decision. Purchasers over all business sectors hope to see more noteworthy highlighting on fuel proficiency and a huge move to elective fuel vehicles in the coming decade. Electric/battery, water, hydrogen and sun powered were among the foreseen fuel hotspots for autos without bounds (Car Online, 2009). Besides, Austin and Dinan (2005) accept that buyers completely esteem lifetime fuel reserve funds while considering Fuel economy in their vehicle decisions. There is most likely that purchasers do think about fuel costs, do esteem efficiency, and that their enthusiasm for Fuel economy increments when fuel costs increment (Mahadi and Gallagher, 2009).