2.

1 Literature Review

The literature review is a foreground, explanation and justification for research to be

carried out. It helps in identification of research gaps, putting together of research,
framing of research concern and hypothesis, selection of appropriate research
methodology and ultimately in establishing of direction for research to be carried out in
future. It reveals the findings of studies related to particular concern and the main
purpose of reviewing literature is to look carefully at different aspect of concerned
studies. The present study focuses on to study the consumer behaviour towards the
purchase of pre-owned cars in Himachal Pradesh. The related literature has been
reviewed to achieve objectives of the study. The review has been completed by
reviewing journal, articles, text books, websites, annual reports etc.

Purohit (1992) explored the relationship between primary markets for used cars and
found that depreciation of used cars is influenced strongly by the types of changes in the
new model cars. It was also observed that factors influencing the buying behavior of
preowned cars customer include budget constraint, lower price than a new car, tension
free drive, and desire to own a car. It was concluded that important reasons for preferring
a pre-owned car from authorized dealers are professional assistance provided, genuine
spare parts, certification, and easy availability of after-sales service.

Rusert & Wiseman (2003) have listed various advantages of manufacturer certified
preowned vehicle programs offered to the buyers. It was found that manufacture
certified pre-owned programs provide an opportunity to purchase a pre-owned car with
complete confidence and also offered some additional benefits like comprehensive
vehicle inspection, extended warranties, strict qualification guidelines, and roadside
assistance etc.

Suresh & Raja (2006) measured customer satisfaction with reference to small cars. The
research identified sales support, vehicle design, purchase support, cost of ownership
and delight features as underlying factors of customer satisfaction. The research tries to
rank small cars on the basis of these factors. They observed that customer satisfaction
varies among customers on the basis of demographics.

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Kaur & Sandhu (2006) made an attempt to find out the important features considered by
customer while purchased of a new car. The study covers the owners of passenger cars
living in the major cities of the State of Punjab and the Union Territory of Chandigarh.
The study revealed that safety and comfort are the most important features of the
passenger that affect customers. They suggested that manufacturers must consider these
factors while design the products for market.

Sakit (2006) worked on current scenario and future trends of passenger car market. It
was observed that passenger car market have more competition and must fulfill the
needs and wants of consumers. The broad categories of passenger car markets classified
as: mini cars, sub compact, sedan, sedan, luxury, small utility vehicle and multi-purpose
vehicle. The study also revealed that passenger car industry has quantity-focused
production technology, no benchmark for supply of automotive parts and non-serious
approach towards marketing area and there is an enormous scope for passenger car
industry.

Verma (2007) studied the significance of tubeless tyres with special reference to
passenger cars. They stated that tubeless tyres are light weight and offer lower rolling
resistance. She also argued that tubeless tyres improve the fuel efficiency of a car
because of lower rolling resistance.

Susan (2007) analyzed that pre-owned car owners have an informational advantage over
potential buyers with respect to the quality of their vehicles. They also observed that
owners of defected cars will try to sell their cars to unsuspecting buyers while owners of
quality cars will sell it to their acquaintance. They concluded that number of factors
influencing the used car owners buying a car like emotions, purchase intention, family
income, mileage, color of the car and fuel variants etc.

Kaushik & Kaushik (2008) have investigated customer’s preferences toward passenger
car and observed that pre-purchase and post-purchase behaviour of customers mainly
influenced by their friends & relatives than dealers & salespersons. They also analyzed
that Maruti dominates the market with no. of brands like Maruti-800, Alto and Wagon-R,
Swift, Dzire, Alto K10 and Celerio etc. Further, factors such as brand, fuel efficiency
and price were found to be primary determinants for buying car.

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Brosekhan & Velayutham (2008) stated that consumers played different roles while
buying and using a products or services. To study the evolution of consumer behavior
and make strategic planning it important to understand different paradigms of thought
that have influenced the consumer. These paradigms can be positive & negative
paradigms, and affect the consumer buying behaviour and thus impact the purchase
decision of consumer.

Dongyan & Xuan (2008) focused mainly on the youngster and result showed that car
purchasing decision is an important decision for most of customers. Consumers get
information from different channels like car sales staff, internet, family, word of mouth,
car show etc. They concluded that internet has become one of the most widely used
channels to get information about cars.

Bray (2008) studied consumer behaviour model and approaches that can be used in the
process of consumer decision making. According to him there are five major approaches
to understand consumer decision making process. Based on these approaches, the whole
consumer behaviour is studied as five point alternate models of man and emphasized the
need to examine different variables.

Rani (2008) reported that Indian Car industry is entirely different. It was observed that
introduction of a series of liberal policy changes became a turning point for the
automobile industry. The Indian Government announced ―broad banding policy in
1985 which gave new licenses to broad groups of automotive products such as two and
four vehicles. The delicensing in 1993 opened the gates for international auto makers.
Many foreign company manufacturers have concentrated on the premium and mid car
segments.

Prado (2009) reported that as per econometrics of the new and the used cars, new cars
offer better features than used cars. There are numerous, preconceived ideas and
academic theories regarding the interactions between primary and secondary markets. To
investigate the relations, they provided a macroeconomic analysis of different car
markets. The US market defined by constant disequilibrium and multiple interactions
between primary and secondary markets.

Nath (2009) analyzed customers’ responses on various attribute that used in ratings of a
car and also determined the underlying benefits consumers are looking from a new
41
generation car. It has been observed that customers are purchasing new generation cars
because of several considerations and these considerations can be attributed to two
major factors which may be labeled as: economic benefit factor and social benefit factor.

Sudhaker & Venkatapathy (2009) throw light on the influence of peer group in the
purchase of a car. It was observed that the influence of friends is higher for the purchase
of small sized and mid-sized cars. They concluded that rising income has enhanced the
purchasing power and people are able to afford a car. Further it was observed that
customer demands are dynamic, but its consideration is necessary for every company for
the existence.

Alejandro & Chu (2009) studied the impact of used vehicle import on new vehicle
market after implementation of NAFTA agreement in Mexico. They concluded that
adoption and implementation of NAFTA agreement created favourable legal
environment condition for used vehicles but new vehicle sales are likely to stay flat or
decline.

Berndt (2009) discussed that automobile industry plays critical role in the economy of
nation with respect to its GDP and employment. They stated that service quality is a
fundamental aspect of service, especially the case with motor vehicles, where substantial
profits are generated in the servicing of vehicles. The factor analysis of the research
indicated that service quality factors could be identified. Apart from the tangible factors,
the factors identified service quality dimensions in this context, highlighting the variable
nature of service quality. The study helped to find out the perception of customers
towards services being delivered by automobile companies.

Shimpi (2010) stated that used car segment has emerged as one of the major industry in
India, with yearly demand of about 1.4 million. The most significance factor that
motivates consumers to buy used cars is its lesser price in comparison to new car. He
observed the relationship between different variables that influence customer behaviour
to purchase a pre-owned car. It was observed that fuel efficiency is also given prime
importance for used car. A significant relationship was observed between family income
and make of the car, gender and colour of the car. Although there was insignificant
relationship between family income and purchase intention, occupation and brand of the

42
car, family income and mileage. He concluded that owners of used cars carry similar
emotions and attachment as good as owner of a new car.

Kayaly & Taher (2010) described in their study about formalization of dimensions of
marketing applied to the automobile industry. This study is an attempt to develop
measurement tool toward factors affecting customer's satisfaction. The measurement
scale was applied to car owners of a certain (one single) brand to avoid the brand
moderation effect. They suggested testing the effect of key dimensions on customer's
satisfaction and consequently on customer's loyalty, consequently used the results to
guide marketing activities of car agents. It also suggests investigating the scale in
different industries and contexts.

Subadra, Murugesan & Ganapathi (2010) reported that India is undergoing a paradigm
change in terms of consumer dynamics. They observed that market was predominantly
driven by consumers. Consumers were given many options to decide from a range of
options rather than having only few products to choose. They suggested that marketers
need to develop an effective communication to reach targeted audience. They concluded
that focus should be shifted from product based marketing to a consumers based
marketing.

Stephen & Zinaida (2010) using regression analysis they find whether customers of used
car behave as per prospect theory or not. They found that in each category of product
customer creates its own reference point and then evaluates the car to be purchased
against that reference. They concluded that consumers are risk seeking or risk averse
based on the reliability of car they are purchasing is above or below average reliability.

Katarne & Sharma (2010) measured service quality level of typical automobile
dealership. An attempt has been made to find out reasons for dissatisfaction among
customers by applying the root cause analysis. For improving the service quality
necessary suggestions have been made on behavior of service advisor, response at billing
counter, delay of vehicle, commitment of sales person, hospitability and technical work,
improper washing, cleaning of the vehicle etc. and the service centre has executed these
suggestions.

Chowdary, Sagar & Gambhiraopet (2010) studied the post-purchase behaviour of Tata

43
Nano buyers. They analyzed perceptions, dissonance levels and moments of pride of
Nano customers. Conceptualization of Nano car as the world's cheapest car as well as
concern of taking the cheapest car. They concluded that introduction of Tata Nano would
herald the new age of small cars in general and whether India can become the hub for
small cars in particular.

Nigam & Kaushik (2011) discussed the significance of brand equity enable companies to
retain customers better, service their needs more effectively, and increase profits. They
have observed that the brand equity can be increased by successfully implementing and
managing an ongoing relationship of marketing effort by offering value to the
customers, and listening to their needs. They concluded that brand managers efforts
should be focused on customer loyalty, trustworthiness, brand advocacy, brand
distinction and innovative features in managing brand equity. The marketing mix should
be focused to exploit brand equity in terms of the purchase decisions and repetitive sales
of the products.

Jahanshahi et.al (2011) stated that customer satisfaction and loyalty are most important
factors that influence automotive industry to maximum extent. On the other hand,
customer services can be considered an innate element of industrial products. They also
observed that customer service quality, product quality, customer satisfaction and loyalty
can be measured at different stages i.e. at the beginning of purchase, and one or two
years after the purchase. The results of the study showed that there was a high positive
correlation between the constructs of customer service and product quality with
customer satisfaction and loyalty.

Joshi & Mishra (2011) carried out the study to understand the customer awareness on
environment friendly car (EFC). So that efforts of the manufacturing the green car can
be achieved in the upcoming future. They depicted the significance of environment
friendly cars in the upcoming future. They also suggested the need for training of
professionals for serving the green customer. They recommended the need to fully
ascertain the attitudes of the car buyers in India and their behaviour for the environment
friendly car.

Dharmaraj & Sivasubramanian (2011) identified factors contributing towards brand

preferences. They also classified brand preference factors into four categories namely:

44
information factors, psychological factors, economic factors and product factors. They
found that advertisement, friends, relatives and decisions influenced by spouse
influences the car customers’ preferences towards purchase of pre-owned cars. In
psychological factors brand name, brand superiority, and brand loyalty play major role
in influencing consumers’ car preference. They further observed that mileage,
maintenance and price play a major role in influencing consumer’s car preference. While
in product related factors quality was given the utmost significance, followed by comfort
and technology. They concluded that all round ability of the car brands, viz, reliability,
safety, technology, value for money, high resale value, high mileage, maintenance cost,
comforts, durability, etc., prove to be decisive factors of customer choice.

Srivastava & Tiwari (2011) studied consumer behaviour for sedan passenger cars. The
buying behavior will help the marketer to succeed in the market. They observed that
increasing purchase power of customer lead to the change in their life style. There has
been a huge demand for automobiles and new technologies In India. Consumers'
behavior is affected by factors like: economic, technological, political, cultural and
demographic. While realizing the importance of passenger car industry in the present
economic scenario, authors have made an attempt to analyze the consumer behavior.
They concluded that brand choice does not depend on income or occupation of the
customers, but it depends on gender.

Johnson & Sargunam (2011) analyzed that world trade organizations in India could no
longer apply quantitative restrictions on the import of pre-owned cars. As the used cars
are very inexpensive they would pose a serious threat to the Indian car industry. In this
study an attempt has been made to understand the attitude of car buyers towards the
imported used cars by using information system. The results also revealed that one third
of the respondents show interest in the imported used cars. It is found that the
demographic factors such as age, monthly income and the number of earning members
in the family have a significant impact on the positive attitude towards the imported pre
owned cars.

Sathyapriya & Suganesh (2011) reported that passenger car segment has made a rapid
progress in the country after de-licensing of the industry in 1991. Consequently, many
global players have opened their plants in India and these global players are developing
new strategies to increase their market share. They do this by launching new models of

45
cars and adding new variants in existing models to target potential customers. The
current research explores the choice of a brand in different segments and the factors
influencing the same with weighted average ranking. The study revealed that factors
influencing the brand preference among the consumers who prefer passenger cars in mid
and premium segments vary, and age & income influence their brand choice.

Chang & Hsiao (2011) stated that a car infotainment system (CIS) an updated system in
new cars support driving behaviour and provide entertainment activities. This research
investigated how CIS affected consumers' car purchase intentions. The results showed
that a CIS possesses value when it was useful or provides driving safety. In addition,
high price or perceived risk will affect the value of a CIS. Further, they discussed some
practical implications for car manufacturers and auto sectors. This study ultimately
sought to facilitate the future development of the auto market.

Pallawi & Sangode (2011) conducted a comparative study of service quality of Maruti
Suzuki and Hyundai Showrooms in Nagpur. It was observed that service quality is a
fundamental aspect of service provision and this is especially in case with motor
vehicles. Whereas substantial profits are generated by servicing vehicles. It was found
that Service quality has an effect on profitability and costs. As service quality impacts
customer satisfaction, customer retention, reduce costs and increased profitability.

Elanthiraiyan & Balakrishan (2012) observed consumer perceptions and behaviour of

the car owners. They also analyzed the factors influencing car purchase decisions and
the level of satisfaction among respondents. The study throws light on various features
that the manufacturers should concentrate on to attract the prospective buyers. They
suggested that manufacturers should position their products through sales promotional
activities and advertisement. It was noted that majority of the respondents formed their
expectations through the statement made by friends and relatives and therefore it would
be beneficial if the extent of influence of such groups was studied. It was concluded that
the socio-economic determinants of consumer behaviour consist of age, marital status,
occupation, education, income, family size.

Raj & Menon (2012) analyzed factors of the consumer purchase behaviour of passenger
cars. The main purpose of this study was to come up with the identification of possible
parameters and a framework development that influence the consumer purchase

46
behaviour patterns of passenger car owners. It was observed that manufacturer criterion,
importance attached to the car brand, dealer, show room experience and after-sales
service package are the main factors associated with sale of cars. The researchers
concluded that the main reasons for high consumerism in Kerala State are higher
purchasing power, very high literacy rate and inflow of foreign money into the State
from people working in US, Europe, Australia, and other Asian & Gulf counties.

Stella & Rajeswari (2012) identified different sources of information used by the
buyers and their role in making purchase decisions. It was observed that consumers
were influenced by various factors such as culture, family, reference group, age, life
style, personality & self-concept, motivation, perception, learning, beliefs and attitudes.
It was further observed that majority of respondents were satisfied with performance,
quality, dealer network and after sales service. The researchers concluded that the
customer satisfaction is the important factor, which affects the financial position and
goodwill of the company.

Nataraj & Nagaraga (2012) discussed the emergence of online booking and online
purchase of cars. They observed that online consumer behaviour is evolving and
automotive companies need to anticipate this evolution in order to be part of, or even to
influence the changes in the buying behaviour of customers. The researcher concluded
that in order to ensure customer satisfaction and to retain their loyalty, the
manufacturer/dealer collaboration in the form of effective retail integration and
integrated lead management will become more important than ever. Companies need to
establish and maintain a true two-way dialogue with individual consumers through
personalized communication.

Monga, Chaudhary & Tripathi (2012) revealed that competition was heating up in the
automobile sector with a host of new players entering in the car market like Porsche,
Bentley, Audi and BMW. They attempted to find out concern of brand personality of
selected cars in India. They analyzed the applicability of existing research concepts,
theories, and tools for evaluating consumer satisfaction. They concluded that
companies are playing on the peripheral cues to maintain their total relationship
management and to connect existing & potential customers.

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Sardar (2012) studied the factors influencing brand preferences of passenger cars and
satisfaction level of passenger cars. They found that majority of the consumers were
using Maruti-Suzuki brands in passenger car industry. On the other hand, brand was the
most significant factor while choosing a car; while price was the second most
important factor. It was also observed that most of the respondents did not want to
change their brands. They concluded that the automobile industry had strongly striven
towards globalization, which increasingly affects the policy at local, regional and
global levels.

Raj & Menon (2012) found that selection of car variants depends upon price of fuel in
the market. It was also observed most of the cars are being driven for the use of family,
to go work place and business usage. It was also observed that buyers collect
information mainly in the initial stage of purchase. Further, advertisement,
commercials, TV shows, company website and visit to distributers are some of the
primal source from where the customers gathered car related information.

Singh & Gupta (2012) discussed that Indian automotive industry is now dynamically
working in the process of adopting the dynamics present in global market. They
observed that Indian market is now open to absorb the various driving factors that
further results to the formation joint ventures between Indian and foreigner players.
India at present is ranked only behind china with the world second largest population. In
accordance less than 1 percent of Indian population currently owns a four wheelers
which is much smaller proportion than the rest of south east Asian region. Therefore,
India is considered as most lucrative market as it is one of fastest growing economies in
the word.

Rezvani, Dehkordi & Eghtebasi (2012) stated that there are many factors that may have
an impact on consumer purchase intention. Based on previous studies they have
highlighted the relationship of variables and consumer intention. This study has
provided support for relationships between the variables and purchase intention. They
concluded that product familiarity is main concern for foreign companies while entering
to global trade, as it can create consumer trust that result consumer tendency to
purchases.

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Vidyavathi (2012) emphasized the fact that manufactures have to concentrate upon to
draw attention of the prospective buyers. They observed that demand of small segment
car is constantly rise due to growth in the number of small families. Hence, to exploit
this demand car manufacture companies focus to find out the preferences, wants, needs
and taste of consumers to design a product acceptable by the masses. They concluded
vehicle mileage and driving comforts are the foremost requirements of buyers followed
by easy availability of spares and budget to purchase a car.

Monga, Chaudhary & Tripathi (2012) found that car sale has increased with great peace
due to rise in disposal income and easy finance availability in India. Global player have
shown keen interest in Indian market and competition is becoming higher and higher.
Car manufacturer have to focus properly on customer perception and their satisfaction.
This study revealed that customer relationship management and personal connection are
very helpful for car companies. Further, they found that brand perception in auto sector
is mainly depend upon quality of services provided, price, availability of spare parts and
maintenance cost. They further concluded that car dealers act as a link between
manufacturers and customers and have crucial role in brand.

Sharma (2012) studied pre-owned cars market and observed that this market is
increasing day by day. She identified the factors such as attractive exchange offers,
customer retention, support from commercial banks and maximum utilization of dealer’s
network, are primary reason for the growth of pre-owned cars. She further revealed that
high profit in purchase of pre-owned cars as compared to new car, increased income of
middle class, change in life-style and shifting of customer from two wheelers to four
wheelers has increased the demand of pre-owned cars in India. They concluded that the
pre-owned car segment may become double to the new car market in next five years.

Zuchowski (2012) presented that comparative assessment on passenger safety measure

in the front and rear seats during a frontal impact of a car and also evaluated the risk of
injury of the rear seat passengers on the basis of the loads observed in the crash tests.
Condition of safety of the rear seat occupants in passenger cars had been evaluated in the
context of the front seat occupants for many years. The result of such assessment was
usually favourable for the passengers in the rear seats. The situation had changed after
the introduction of advanced systems to protect a driver and a front seat passenger
against the effects of frontal impacts. A common opinion that adult passengers in the rear

49
seats were safer was currently doubtful but for the children aged about 10 years, the rear
seats are considered still safer than the front seats. So, it can be said that modern
technology in new generation of cars has increased the safety measures in front seats
also.

Raj, Sasikumar & Sriaram (2013) analyzed different factors influencing brand
preference of customer in sports utility vehicles and multi utility vehicle segment. They
observed that customer gave preference to factors namely: reliability of product,
monetary factor, frequency of non price promotions, trendy appeal, trustworthiness and
customer feeling. They suggested an urgent need for marketers to take the above factors
into consideration when designing and finalizing the product.

Thakur & Murgi (2013) studied market potential and size of hatchback car segment in
BRIC countries. They also studied the current prevailing market trend and analyzed the
historic trends in the market in order to find out the changes in the automobile market.
Since liberalization and globalization set up a time line to a particular model being
launched in the market. They also underlined the changing market dynamics of
automobile passengers car market.

Verma & Rathore (2013) studied the luxury car segment of India. It has been observed
that this segment of cars is growing at quite a steady pace with all major luxury car
manufacture entering to Indian market. They observed that change in attitude of the
Indian customer also accounts for the sudden acceleration in the sale of luxury cars. It
was also observed that in luxury car market emphasis has grown from price
consideration to affordability, design to quality and luxury.

Tapas & Dangre (2013) revealed that automobile industry is one of the fastest growing
industries in the world and in last few years many foreign companies had launched their
products in Indian market. They observed that the growth of Indian automobile sector is
mainly due to rise income of middle class, easy availability of finance, improvement in
basic infrastructure, rising income, consumer friendly duty structure, poor community
transport service, low car penetration, exchange of cars, and changing customers’
lifestyle etc. It was also found that buying behaviour of car buyers has undergone a
significant changes and customer purchase luxury cars for status symbol, social
recognition.

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Gaddam (2013) reported the production and sale trend of automobile industry in India.
They noted that Indian auto mobile sector is growing day by day and vehicle demand is
increases in domestic market as well as in foreign market. The Indian automobile
industry has witness growth after 1991 industrial policy. The auto mobile industry has
become the backbone of India economy and has employed 13 million individuals. The
automobile industry production has increased from 1.19 million rupees in year 1989-90
to 20.59 million rupees in the year 2007-2008 with annual growth rate of 17.52% and
has become one of the fastest growing sectors.

Shivakumar & Krishnaraj (2013) analyzed that vehicle safety is a key strategy used in
addressing international and national road casualty reduction targets and in achieving a
safer road traffic system. They have advocated the utilization of advanced technologies
like miniaturization of electronic equipments and usage of micro-electronics in vehicle
ignition, braking and performance monitoring system to reducing road accidents. They
concluded that Government should insist insurance companies to give considerable
discounts in premium for the vehicles fixed with advance safety features.

Bhatia (2014) investigated the relationship between the perceived and expected service
quality among passenger car users. The researchers found that the initial direction in
determining the optimum service quality attributes to focus on promoting services. The
largest discrepancies were found along the "reliability" dimension. This was alarming
since it was identified as the most important dimension in their overall perceptions. This
indicated that the sample population appears not to be getting what they expect from
their companies. However, service managers often need to consider the varying impact
that both process and technical factors of a service had on perceived service quality.

Menaka & Ashath (2014) observed that automobile industry in India is expanding at
large pace. Increasing per capita income of people has resulted in increased purchase of
luxury cars. They further observed that companies are finding many ways to satisfy their
customers and one of the methods used to find the level of customer satisfaction is
“Customer Satisfaction Survey”. They concluded that measurement of consumer
behaviour of current generation has become difficult due to failure of time tested
marketing concepts. The new generation consumers are difficult to classify by
conventional demographic factors. The preference is characterized by distinctiveness of

51
an individual’s expectations, for multiple options, heavy tendency of brand loyalty and
switching towards competitor brands which provide higher value to the consumer.

Arora, Singha & Sahnry (2014) described the model of consumer behaviour and
explained the affect of some of the constant variables which are present in the
environment at the time of consumer decision making process. Furthermore, she also
tells how a working model of the theory be constructed in real time based on original
Howard Seth model of consumer behaviour theory.

Alessandro, Lizzeri & Roketskiy (2014) have investigated the allocative and welfare
effects of secondary markets for cars and set up model for the same. They found that
Secondary markets play a significant allocative role for some durable goods and the
amount of activity in such markets varies dramatically across goods. Further, the amount
of activity also varies substantially across different countries for the same goods. They
have framed a simple model of durable-goods markets to tackle related issues. They also
explained that US used car market is highly active than the French market.

Sravan, Sarakamu & Rao (2014) revealed that because of changing customer perception,
Indian Sports Utility Vehicle (SUV) market has become one of the fastest growing
markets these days. They observed that main factors that influence SUV buyers are
price, space and off road capability of SUVs. Further, SUVs with powerful engine,
spacious & better safety features, and sturdy design provide better experience to
customers.

Saxena (2014) used Engel-Coleman-Blackwell model to determine consumer

preferences and stated that when customer made final purchase decisions, their
preferences combine with budget available. Consumers have very complex nature and
cannot be classified by conventional demographic factors. It is important to understand
their thought process, buying preferences, and decision making process. They
concluded that change in income patterns and hike in petrol price are the main drivers of
increased demand of small cars in Indian market. It was also suggested that
advertisement is very effective tool for creating awareness & promoting product
consumption and have influence on consumer preference.

Shende (2014) elucidated that consumer behavior consists of all human behavior
involved in pre and post purchase decisions. Proper understanding of consumer
52
behaviour makes a company successful in the market. This study explained the
determinants of consumer behaviour are socioeconomic, psychological, political,
geographical, demographic and product & technology employed. It was also found that
customers who prefer purchase mini segment car are highly cost conscious but the main
focus of mid segment customers is for safety, driving & seating comfort, brand.

Lakshmanan & Gayathri (2014) discussed the significance of consumers’ preference

towards usage of cars. They found that customers buy new cars for the purpose of
updating old car and to ensure trouble free travelling. It was further observed that
features like brand, look, fuel efficiency, advertisement of car and monthly income of
customers act as key determinant in finalization of purchase decision. It was further
observed that out of comfort, safety, aesthetic & technology, and the comfort factor were
rated as the most significant factor for small car market.

Biswas, Mukherjee & Roy (2014) stated that changing customer perception has made
Indian automobile sector as one of the most growing sector. They have studied buying
behaviour of customer while purchasing SUVs and found that customers influenced by
17 main factors that include brand image, price, fuel efficiency, performance, comfort,
after sales service, ease of maintenance, safety of passengers etc. It was further found
that all these factors have very important role to ensure customer satisfaction in
automobile sector.

Srivastava and Matta (2014) explored the consumers’ behaviour towards passenger cars
in Delhi NCR and tried to identify different sources of information and their role in car
purchase. They found that various factor such as culture, family, reference, age and life
style influence car purchase decisions. This study also revealed price and social status as
most important factors that influence car buyers.

Pudaruth (2014) described in her study that supervised machine learning techniques are
employed to predict the price of used car in Mauritius. The predictions are based on
historical data collected from daily newspapers. Different techniques like multiple linear
regression analysis, k-nearest neighbors, naive bays and decision trees have been used to
make the predictions. They have find out methods provided comparable performance
like: sophisticated, algorithms, to make predication. The main objective of the study the

53
price attributes had to be classified into classes which contained a range of prices but
this evidently introduced further grounds for inaccuracies.

Gavazza, Lizzeri & Roketskiy (2014) analyzed the used car market and observed that
important source of gains from trade in this market is the heterogeneity in the
willingness to pay for higher-quality cars but transaction costs act as hurdle in this
business. They further explored that how the income distribution affects this
heterogeneity. It was also observed that income is an important determinant of
willingness to pay for quality. They concluded that transaction costs have a large effect
on volume of trade, allocations, and the primary market.

Srivastava & Matta (2014) conducted research on consumer behaviour toward passenger
cars in Delhi NCR region. They found that consumer behaviour is mostly influenced by
age, culture, family and lifestyle. Further the factors such as price of car, durability and
social status act as most significance factor for the customers. They concluded that
consumer behaviour is the subset of human behaviour that contributes in making
purchase decision. Understanding of consumer behaviour enable firms to make
compatible marketing and production decisions.

Markan (2015) revealed that cars are not only a medium of transport at present but also
acts as status symbol in the society. He observed that there existsa significant
relationship between income and size of car that customer prefers to buy. He concluded
that there exists a significant relationship between income and type of car.

Biradar & Kulkarni (2015)observed that the growth in number of middle class families
and increase in income level henceforth have made India, as one of the potential market
for pre-owned cars in recent times. Many Indian & global car manufacturer as well as
another business houses have shown keen interest in transforming Indian pre-owned car
market into an organized sector. They concluded that the growth of pre-owned car
market is very high and unorganized car dealers are trying to meet the standards and
professional approach of organized players in the sector.

Cheng W. (2015) analyzed the impact of several factors viz. social factors, marketing
factors and consumer factors and their effect on buying behavior of pre-owned car
buyers. They observed that five stages in decision making process, named as the
problem recognition, information search, solution evaluation and selection, purchase
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decision implementation and post-purchase behavior influencing decision making
process and have significant impact on pre-owned car consumers.

Patial (2015) observed that car purchase is mainly influenced by factors like : brand,
latest technology and safety features, while other factors viz. economic consideration
and fuel efficiency least affect buying behaviour. It was further observed that high
valued brands like BMW, Mercedes etc. were rarely visible Indian roadsa decade ago.
While brands like: Porsche Cayenne SUV, Audi, Volkswagen, Chevrolet, Volvo etc. are
being regularly driven on Indian roads with high pride and flaunt in the present time.
This concluded that luxury cars have become the symbol of personal and social identity.
The findings have brought into forefront important parameters that are considered very
crucial while purchasing a luxury car.

Ravi et.al (2015) discussed that purchase decision for hatchback cars is influenced by
factors like: safety, performance; aesthetic and value. They draw a positive relationship
among safety, performance, aesthetic, value and consumer’s satisfaction for hatchback
cars. They concluded that hatchback car manufactures should focus more on value added
activities/services. As there is a huge competition in the market. They concluded that
companies need to provide low priced hatch back cars with quality, low maintenance
cost for their buyer’s and also need to consider the fuel efficiency factor, as Indian
consumers consider all these factors at the time of making their purchase decision

Bhandari & Phadtare (2015) analyzed the factors that influence the purchase of pre
owned cars. They find out that that the hedonic benefits of the passenger car have
significant impacts on customer preference. Further, it was found that functional and
social factors also affect preference of used car buyers.

Salvi & Prajapati (2015) explored the factors influencing the preferences of young
generation while buying cars. They observed that the buyers in this generation look for
best interior, exterior and variety of colors is also important for young generation. Other
things being considered by them include power break, power steering, powerful engine
for high pick up and speed for smoother driving. They concluded that purchase decision
of car is influenced by the advertisement, family and friend’s recommendation.

Biradar & Kulkarni (2015) studied pre owned car market and observed that different
market players like authorized and unauthorized dealers were involved in the supply
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chain of used vehicles. It was observed that India has emerged as world largest auto
mobile industry. Pre owned car demand in India market was reported 10,50,000 cars in
2015. The pre owned car market has become a source of major income for dealers. The
consumer purchase decision to buy the pre owned car was influenced most by friends,
relative and family. They concluded that automobile industry has witnessed the boom in
the last few years.

Kusuma (2015) reported that liberalization, privatization and globalization policy

influenced many global companies trading and manufacturing their products in our
country. These companies offer similar value proposition and provide highly customized
products. They identify possible parameters that influence consumer buying behaviour
like: family, self theory, community, services, price, customer satisfaction and brand
loyalty. They concluded that automobile industry developed in two stages in India, the
Maruti era and the post liberalization era.

Malke (2015) studied buying behavior of consumer in small car market. They dealt with
various aspects for determining consumers buying behaviour towards small cars. The
factors influencing buying behaviour are: price & fuel efficiency, money, resale value
of small cars. They concluded that consumers are fully satisfied from their brand and
purchase decision. The study reveals that price is one of the most important criteria in
selection of a car and technology features in car are least preferred criteria.

Rana & Lokhande (2015) stated that customer centric services focus highly on satisfying
their customers. They observed that in present time of cut throat competition
satisfaction and delight of the customer is very crucial for companies. It was further
observed that customer needs and wants are changing day by day. They concluded that
many auto mobile companies are coming to Indian market and increasing the
competition in market.
Such as for Maruti Suzuki Ltd. Co. Hyundai is posing a big challenge.

Karl (2015) studied the influence of technology development and diffusion of

innovations in automobile industry. They observed subsequent challenges in the area of
technology, customer, structure of the market and maintenance itself. They concluded
that different factors influencing the purchase decision of passenger cars can be
categorized and analyzed.

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Hung & Yazdanifard (2015) revealed that passenger vehicle safety is a major concern
among cars buyers in Asian countries. They observed that high importance to safety
features were given by customers while purchasing a car in these countries. Vehicles
with high level of safety measures were used to be a feature available only in luxury cars
in the olden days, but in present time the safety feature has become a trend in the
automobile industry. They concluded that recently this feature has become more
important to reduce road accidents.

Koch & Mkhitaryan (2015) revealed that consumer satisfaction and brand trust both
have significant impact on consumer loyalty. It was also found that consumer loyalty
towards luxury cars is influenced most by consumer satisfaction.

Doshi & Parmar (2016) discussed in their study that car purchase decisions is influenced
by several factor like: age, income, qualification, brand preference, model and family
suggestion. Therefore, auto mobile companies should put efforts to understand consumer
behaviour and their perception properly. Further, it was also observed that consumers are
also influenced by mileage, interior & exterior, availability and ease in payment of loans,
and taxes on car etc.

Shanker (2016) found that customer perception towards purchase of pre-ownedvehicles

from organized car market is to have professional assistance, easy financing, after sale
services, fair price and free service. While as that of unorganized sector is concerned the
factors that matter most for customers are mutual trust and resale value of the vehicle.

Priya & Ravi (2016) described Indian automobile industry as one of the largest
automobile market in world. The Indian passenger vehicle and commercial vehicle
manufacturing industry are the fourth largest industry in the world with annual
production of more than 3.9 million units per years. They studied various factors
influencing customer decision: culture, family, reference, age and life style. Most
important factors that influence the consumer passenger car are the price of the car,
social status.

Thirunarayanasamy & Rajavel (2016) stated that customer satisfaction is the key of
business services and company performance that have fulfilled their need and wants.

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They observed that major factor that influence post purchase behaviour of customers
are: fuel consumption, price of the car, style, design of the car, break performance, and
brands of car. They concluded that company satisfy their customers and creates good
experience by keeping above factors into consideration.

Rajireddy & Ravinder (2016) examined the brand preferences of the consumers towards
the passenger cars. They tried to study the effect of demographic and behaviour patterns
on brand preference of car buyers. They found that the price is most significant factor
that affects car purchase decision and automobile sector is highly influenced by
globalization. It was also found that maximum consumer of car belongs to age group
3545 years.

Dangi (2017) discussed that passenger vehicles, mainly cars constitute the vital segment
of automobile industry. Since various factors related to the growth of automobile sector
give indication of more demand of passenger cars across the country, metropolitan cities
and in small cities. They concluded that among the identified factors, safety features
arethe most important one followed by driving comfort, maintenance cost and brand
image. Surprisingly the factors such as price and latest technology have been the least
important factors as per the opinion of respondents.

Sahu (2017) discussed about the different factors which influence the customers’
preference to purchase the cars. Factors like self esteem, performance, publicity in this
regard are considered significant. He concluded that self esteem is one of the major
influencing factors among customers while purchasing the car.

Patil (2017) narrated that manufacturers focus more on building and maintaining
customer relationship management to connect with present and potential customers.
They further observed utility of different vehicles. Multi utility vehicles used to
accommodate many passengers, especially while going for a long trip. Sports utility
vehicles used to long trip and rough roads.

Sakthivel & Kumar (2017) studied the barriers in the growth of Indian automobile
industry. They observed that fuel dependence of other national, insecurity in Indian
economy; environmental concerns etc. are major deterrent in the growth of Indian
automobile industry. They suggested global approach in manufacturing and sale for
automobile companies for their growth.
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Gupta, Syed & Chaturvedi (2017) stated that Indian automobile market is world largest
growing car market. The country has many global players entering the market and to
extend their business and to address increasing customer expectations. They observed
that factors that influence the consumer purchase behaviour are, price of car, fuel
efficiency, socioeconomic, demographic, product and technology. Customers in Indian
market are more inclined to buy Maruti and Hyundai brands in hatch back segment and
they also focuses on security, driving and seating comfort while purchasing a car.

Yallapragada (2017) stated that automobile industry is facing new challenges like:
globalization, individualization, digitalization and increases competition. They observed
latest trends in automobile industry like: how people buy, what they buy, when they buy,
and why they buy cars for themselves. They concluded that philosophy of providing the
right car, in right place, at the right time and in accordance with the infrastructure and
customer needs of each region.

Jaganathan & Palanichamy (2018) analyzed that in the marketing of products, marketers
faced challenges on various fronts like consumer’s age, income, educational level, taste
and preference etc. The successes of marketing depend on how the products are
developed and meet with customers’ needs. They further concluded that it is convenient
to drive small cars which are also suitable for Indian road conditions.

Dhanabalan, et. al (2018) studied factors influencing consumers car purchase decision in
India automobile industry and revealed that there exist very high competition in this
industry due to availability of number of Indian and foreign brands. They further
observed that main factors influencing consumer behaviour are brand, price, quality,
design, utility, and technical considerations.

Subramanian & Muthu (2018) revealed that sports utility vehicles (SUVs) are the most
growing segment in auto sector. The main reasons for popularity of SUVs in the Indian
market are rugged and sporty look, seating capacity & towing power, and greater size &
visibility of SUVs.

Resmi, & Aravind (2018) found that lack or unavailability of information on regular
basis has created many problems in used car market specially in case of unorganized

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sellers as compared to organized one. The gap in the information further lead to
difference in price charged by organized and unorganized pre-owned car sellers. They
further concluded that intensity of problems is higher in unorganized used car market
than organized one.

Narasimham (2018) observed that consumer behaviour is a fundamental ingredient in

marketing process and is has very important role in new product introduction marketing
expenditure and improving productivity. The business organizations are focused mainly
on customer and to build relationship with them. They further concluded that it is
important to know about consumers purchase process and buying habits to understand
customers’ needs.

Mathur et.al (2018) found that buying behavior of car buyers is influenced by type of car
and brand image of the cars & manufacturer. It was also observed that potential car
buyers are influenced most by technical specifications such as engine type and
efficiency. It was also observed that good advertising with detailed features is also a
dominating factor that influences the customers.

Kalaiselvi & Nidhyananth (2018) studied brand preference and factor influencing
purchases of sedan cars and observed that factor like car design, word of mouth
communication, technology, brand, feature, money value and services etc. influence
customer purchase decisions.

Mohan, Raghu & Katta (2018) revealed that India has become a global player in the auto
mobile market and many MNCs like Ford, General Motors, Honda, Toyota, Benz,
BMW, Suzuki, Hyundai, Renault and Mitsubishi etc. has entered to Indian market. They
further observed that consumer perception in Indian market has changed and they have
start thinking about new technologies in their car. They concluded that consumers are
mainly influenced by factors such as engine performance, safety, security, after sale
services, comfort driving etc.

Venkatachalam & Surumbarkuzhali (2018) studied customer’s expectations for Hyundai

i10 car. The main motivating factors to buy this car are design, style, safety and
technology incorporated but attributes like suspension and car handling were identified
below par from customer point of view.

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Subramaniam & Muthu (2018) found that sports utility vehicle (SUVs) have become the
fastest growing segment of automobile industry. The main feature of SUV that
differentiate it in the market is it’s heavier and larger size than conventional passenger
cars. They analyzed that large size SUVs with safety features like ABS, airbags, anti-roll
system, blind spot detection, rear park assist, collapsible steering column, and head
protection system are preferred most by the customers.

Jaganatan (2018) studied buyer behaviour of customer toward hatchback cars produced
by Maruti Suzuki. They found that buying behaviour and customer satisfaction of
hatchback car buyers influenced by price, fuel efficiency, maintenance cost, after sales
services and features. They further observed that customers are unsatisfied with fuel
efficiency, delivery time, free services provided, and cost of spare parts of Maruti Suzuki
cars.

Pednekar (2018) factors such as test drive, clean car fax, repainted, sign of smoking and
pets, window and locks work, lights work, clear title, gas cap etc. influencing the
purchase behaviour towards pre-owned cars. They also found that pre-owned car buyers
have shown preference towards pre-owned car’s condition, car cost & budget, mileage,
model of pre-owned car, life of car and accessories attached with cars.

Maji & Bandyopadhyay (2018) developed a model for the sale of pre-owned cars. They
further stated that buying a pre-owned car is no longer an embarrassment for a consumer
and young consumers in India prefer pre-owned car with high-end features. In order to
win consumer’s confidence, sellers should understand the key perceived risk attributes
and develop risk reduction strategies.

Chaturvedi & Reddy (2019) observed that increasing competition in automobile industry
has lead to high level of innovations in the sectors. They have analyzed the impact of
advertisements and sales promotion activities on sales of a particular automobile
company. They also observed that customer expectations, cultural, socio-economic,
personal and psychological factors influence consumer behaviour most. They further
concluded that consumer behaviour is also influenced highly by celebrity endorsement
and TV advertising.

Hristova (2019) stated that second-hand cars are gaining popularity among consumers
around the world. They suggested that second-hand cars vendors need to offer
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guarantees, develop an attractive online platforms to supply information to global buyers
and provide emotional experience while purchasing a car.

Patel (2016) observed that customer behavior is multifaceted & complex phenomenon
that has significant role in marketing and promotion. For survival, marketers have to
understand basics of the parameters that govern customer behavior. They further
concluded that purchase of a new car is affected by price of car, safety, mileage, and
variant of car, etc.

Dharmaraj (2020) stated that Indian passenger-car industry has been on the continuous
growth trajectory in the recent past aided by different contributing factors. The consumer
buying behavior can be studied by knowing customers’ preferences and perceptions
about the cars in the market and the possible entrants in the market. This preference and
perception sketching will help in knowing what a customer or a potential customer
thinks about a given brand of car and what are the possible factors guiding a possible
purchase.

Shokouhyar, Sina & Safari (2020) studied customer satisfaction after-sales services.
They observed that customer satisfaction is a multidimensional & extensive notion and
many different variables such as brand name, sales force, product or service quality,
after-sales services etc directly affect customer satisfaction and customer loyalty.

Srikanth & Madhavi (2020) explained that automobile sector in India has undergone
significant transformation in the past decade and expected to grow near about 3.62% per
cent annually. Customer preference is complex and undergone rapid change due to the
exposure to huge number of information sources. They observed that consumer
satisfaction depends on actual performance of a particular brand. It was further observed
that brand preference and advertisement play major role in customer satisfaction.

Senthilkumar (2021) explained that Indian automobile sector is directly and indirectly
provides employment to more than 10 million people in the country. They analyze the
factors that influence customers’ brand choice and studied the impact of brand
preference on customer satisfaction. Better quality and low cost products are preferred
most by customers.

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Kumar & Britto (2021) reported that India’s major automobiles industry is located in
Mumbai. Indian automobile industry has faced many problems in the beginning such as
strikes, tariff composition, and tough licensing norms. Indian automobile sector is highly
influenced by rise in fuel cost, and other world economic conditions but Govt. is
regularly taking precautionary measures to deals with these changes.

2.2 Research Gap Identification

Various studies have been carried out to understand the behaviour of consumers towards
brands new cars, pre and post- purchase factors, after-sales services, etc but a little
attention has been paid towards attitude, perception and expectation of consumers
towards pre-owned cars. As this industry has witnessed a significant growth in last
decide with the entry of sellers from unorganized and organized sectors. Therefore it is
imperative to study the consumer behaviour towards pre-owned cars to understand the
needs of consumers. This research aims towards filling up this space with a thorough
study in four districts of Himachal Pradesh with reference to the socio economic profile
and demographic profiles of consumer’s behaviour. The study will help emerging sellers
to identify potential customers segment for their market and fulfill pre and post purchase
expectation of customers in pre-owned car industry. As it is a niche market offering
unique business opportunity with nominal investment.

This review of literature has provided considerable knowledge and information on the
concepts of consumer behaviour and customer satisfaction. Generalization of related
results from these studies is not necessarily appropriate, as pre-owned car sector in India
is still on its growing stage. No detailed study pre-owned car sector in Himachal Pradesh
seems to have been reported so far that provides a strange base for the present study.

In this chapter, an insight was made into literature available in the related that provides
an understanding about the present research. Next chapter of this thesis contains research
methodology that represents the flow activities ranging from problem formulation to
research design, and development of questionnaire for the present study.

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