Car Purchase Factors in Saudi Arabia
Car Purchase Factors in Saudi Arabia
Car Purchase Factors in Saudi Arabia
Executive summary
The purpose of this report is to communicate the results of a marketing research on the
relationship between consumers, cars and auto dealers in Saudi Arabia.
Further this report provides the reader with a comprehensive understanding of the
different usage behaviors and attitudes of consumers in Saudi Arabia toward cars in
general and each dealer. It also provides a study on the relative importance of different
attributes of cars and the roles it plays on peoples lives. And it also emphasizes on the
dimensions of satisfaction and dissatisfaction with cars and auto dealers in Saudi Arabia.
The methodology followed to effectively complete this research started with an
exploratory research to get a general idea about the objectives of the research followed by
a structured self-administered questionnaire that was distributed to (300) and had a
response rate of (75.4%) which was 233 participants.
Key findings of the research are:
1. The different brands (e.g. Hyundai) and models (e.g. Sonata) of automobiles
available on the Saudi market.
2. Factors used by automobile buyers in Saudi Arabia when evaluating different
automobile brands, models etc.
3. The dealers for each brand of automobile on the market.
4. Factors used by automobile buyers in Saudi Arabia when evaluating different
automobile dealers.
5. The different financing options available to Saudi consumers for purchasing an
automobile.
6. Information sources used by consumers in Saudi Arabia during the auto purchase
process.
7. Possible factors that influence what brand, model of automobile a consumer
decides to purchase.
8. Possible factors that influence consumers' overall automobile purchase decisions.
Table of contents
Introduction and
background.. 4
Cars in Saudi Arabia.............................................................................................5
Importance of the research5
Research
objectives 6
Literature review
.7
Methodology...
8
Research method.8
Research instrument....9
Sample and data collection.10
Analysis and
results..12
Research objective 112
Research objective 217
Research objective 318
Research objective 420
Study limitations
23
References
24
program, and 20-25% for used cars. Toyota and Lexus 30% is exchange, and 75% used. 20-30%
of cars driven in Saudi Arabia are owned by females, and 5-7% of them exchange their cars after
3 years. 90-95% male owners change their cars in the same period. (4)
Car imports in Saudi Arabia have increased 125%, from 144,000 cars in 1994 to 324,000 cars in
2003. The most imported cars are SUVs and minivans. (3)
It also helps each service provider to know the different gaps in the market that arent yet met
and try to fill these gaps with a clear idea of what consumers actually wants.
2) Research Objectives
BROAD RESEARCH OBJECTIVES
To study the automobile purchasing behavior of consumers in Saudi Arabia with
particular emphasis on examining factors that influences the auto purchase decision.
4) Where there are several dealers for a particular brand of automobile, what is the nature
of consumers' preferences for the different dealers? What factors influence these
preferences? What is the nature of these influences?
3) Literature Review
For our literature review we have reviewed 3 articles:
1) Robert B. Zajoncand and Hazel Markus
Vol. 9 September 1982, Effective and Cognitive Factors in Preferences
2) Gerald Haubl. (1996) "A cross national Investigation of the effects of country of origin
and brand name on the evaluation of a new car" International Marketing Review pp76-91
3) Busik Choi (2006) " Consumers perception of a warranty as a signal of quality: An
Empirical Study on the automobile industry" pp 1-18 University of California, Irvine
1) The quality and importance of service play vital role in car purchasing. occupation,
age and gender influence car-buying attitudes. There are three factors involved in
Consumers Reaction Analysis: environment, behavior, and affect/cognition. Crosscultural differences arise from different cultural environments that influence consumers'
behaviors. People rely on their previous experiences to help them decide on what kind of
cars and brand names they wished to purchase.
Companies should consider on which elements of the value proposition--price,
service, quality, and image-they wish to focus, based on cultural preferences.
2) Country of origin and the country where the car is manufactured effects on the
perception of consumers when they are looking for a car to purchase.
3) When consumers purchase new vehicles, consumer's past experience with vehicles is
an important factor.
Consumers might value on information about lesser known products more than
the information about a well known product.
4) Methodology
In this part of the study the following will be covered. First, the research method which
is the way this research was conducted and how an exploratory research assisted in the
process. Second, the research instrument which was a structured self-administered
questionnaire prepared after the findings of an exploratory research. Third, which is the
last part of the methodology, the sampling and data collection where different parts of
the eastern region of Saudi Arabia were visited and different demographic variables were
used to make sure the sample is as representative as possible.
1) Research method
To reach to the objectives of this research a survey (i.e. self administered questionnaires) was
conducted. We have chosen the survey option because this research approach is feasible,
provides faster data and can be conveniently executed within the time frame available for the
study. First, an exploratory research was undertaken to identify the variables that need to be
measured and the specific questions that will explain each variable.
The goal of the exploratory research was to provide a general idea on how consumers relate
to car purchasing, to get insights on the behaviors and attitudes of car owners in Saudi Arabia
toward different brands of automobiles and their respective dealers. Further, the exploratory
research identified different variables that were used in designing the questions in the
questionnaire.
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Mainly some articles were reviewed in the exploratory research, focus group interviews were
done and sentence completion tests were conducted. The respondents in the exploratory
research were mostly family members and friends of the researchers.
The results of the exploratory research identified different brands of automobiles in the Saudi
market, different car features, the most important attributes of cars to consumers in Saudi
Arabia, dimensions of consumers satisfaction and dissatisfaction with cars, different services
offered by the auto dealers in Saudi Arabia, what role does a car have in peoples daily life
and dimensions of consumers satisfaction and dissatisfaction with the auto dealers. At the
end several questions were prepared addressing each of these findings.
2) Research instrument
All the results from the exploratory research were used to design the structured selfadministered questionnaires that were used as the main instrument in this research. Both
Arabic and English versions were used.
In this research the objectives were clearly identified and the questionnaire was designed in a
way that makes it able to cover and answer each specific research question.
The variables that the questionnaire was designed to measure are all extracted from the
specific research questions which are listed below:
1) Consumers' perceptions of auto brands
2) Consumers' preferences for auto brands
3) Preferences for (or use of) alternative financing options in auto purchase
4) Importance of different information sources in auto purchase
5) Evaluations of auto dealers
6) Important influences on auto purchase decisions
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Attempted Surveys
Completed Surveys
Incomplete Surveys
Response Rate
English Version
250
197
53
78.8%
Arabic Version
50
36
14
72%
75.4%
GENDER
AGE
NATIONALITY
Male
Female
Frequency
233
0
Below 18 years
18 - 25 years
26 - 30 years
31 - 35 years
36 - 40 years
41 - 45 years
46 - 50 years
over 50 years
Frequency
1
134
40
17
13
10
9
9
Saudi
Non-Saudi
Frequency
155
78
Frequency
120
MONTHLY
11
INCOME
EDUCATION
SR 5,000 - SR 9,999
SR 10,000 - SR 14,999
SR 15,000 - SR 19,999
SR 20,000 - SR 24,999
Over SR 25,000
29
31
17
6
8
Frequency
4
44
13
116
30
5
1
Ford
Toyota
Honda
Nissan
Kia
Hyund
ai
Audi
12
Volvo
24.9%
20.6%
60.9%
44.6%
24.4%
0.4%
6.9%
38.6%
26.2%
b) Is reasonably priced
for its quality level
23.2%
23.6%
54.1%
29.2%
22.7%
16.7%
28.8%
12.9%
9.9%
13.3%
17.2%
58.4%
24.9%
17.2%
10.3%
14.2%
19.3%
10.7%
5.2%
13.7%
70.4%
38.2%
28.8%
20.2%
28.8%
6.4%
4.3%
17.6%
19.3%
54.1%
36.1%
19.3%
1.3%
4.3%
24.0%
21.5%
14.2%
12.4%
19.7%
17.6%
6.9%
0.4%
2.1%
36.5%
68.7%
20.6%
9.0%
25.8%
32.6%
18.9%
0.4%
7.7%
59.2%
17.2%
9.4%
10.7%
84.5%
25.3%
13.3%
1.7%
5.2%
7.7%
3.9%
i)
Has excellent
performance
23.6%
18.0%
47.6%
35.2%
25.3%
0.4%
3.4%
54.1%
25.8%
j)
Has excellent
overall quality
18.5%
15.5%
51.9%
33.0%
16.3%
0.4%
2.6%
45.9%
29.1%
Table 1
Table 1 illustrates percentages of the number of respondents who have selected the
statements according to their perception of each specific car. As we can see majority of
the respondents are in favor of Toyota, while on the other hand the overall perception of
KIA is very poor in the minds of the respondents.
We have conducted further analysis on consumers perception of auto brands through
comparing means of the current satisfaction with car and likelihood of purchasing the
same car again for each of the brands. The variables included were Question 15, 16 & 2.
This is shown below:
Brand
American:
Chevrolet
Ford
Chrysler
Other
S(Mean)
L(Mean)
42
28
8
9
5.69
4.89
3.75
5.78
4.4
3.75
1.5
4.56
Difference
1.29
1.14
2.25
1.22
13
Total
German:
Audi
BMW
VW
Other
Total
French:
Peugeot
Renault
Total
English:
Range Rover
Jaguar
Other
Total
Other
European:
Volvo
Saab
Total
Korean:
Hyundai
Kia
Daewoo
Total
Japanese:
Toyota
Honda
Nissan
Mitsubishi
Other
Total
87
5.0275
3.5525
5
8
7
8
20
6.2
5.37
5.71
5.25
5.76
6.2
4.5
3.5
4
4.733333333
6
1
7
3.5
5
4.25
2.33
6
4.165
1.17
-1
0.085
3
3
1
7
4.67
4
7
5.22333333
3
2.33
7
4.11
1.67
1.67
0
1.11333333
3
1
4
6
7
6.5
3.67
7
5.335
2.33
0
1.165
9
3
2
14
5.78
5.33
3
4.70333333
4.89
3
3
3.63
0.89
2.33
0
1.07333333
33
12
14
5
9
73
5.73
5.83
5.36
4.2
5.7
5.364
4
4.58
4
4.2
3
3.956
1.73
1.25
1.36
0
2.7
1.408
1.475
0
0.87
2.21
1.25
1.02666667
Table 2
In Table 2 the numbers highlighted Yellow are the total respondents that own a car within
that country (brand). And the numbers highlighted Orange are the total means of the
Satisfaction with current car (S) and Likelihood of buying car again (L).
The satisfaction level was rated out of 7, 1 is least satisfied and 7 most satisfied.
And for Likelihood 1 is least likely and 7 is most likely purchasing car again. The
majority of our sample owned American/Japanese cars. And for both they seemed to be
moderately satisfied with their current cars. From this we can deduce that most of the cars
on the street are either Japanese or American. Even though American cars lack good fuel
economy but since fuel is so cheap in Saudi Arabia it doesnt make a difference to the
people. Within category of Korean cars Hyundai is the best in terms of satisfaction and
14
likelihood of getting bough again. Also, Japanese cars are doing significantly well due
them being reliable, good fuel economy and affordable to middle class people.
B) Consumers' preferences for auto brands
We used frequency analysis to find out how many individuals in the sample
owned each type of different car. The variable included was Question 2 from the
questionnaire. We got the following results:
Car brand
Frequency
American:
Chevrolet
Ford
Chrysler
Cadillac
Dodge
Jeep
Mercury
German:
Audi
BMW
VW
Mercedes
French:
Peugeot
Renault
English:
Range Rover
Jaguar
43
28
8
2
1
2
1
5
8
7
5
6
1
6
3
Total
Car brand
Other
European:
Volvo
Saab
Korean:
Hyundai
Kia
Daewoo
Japanese:
Toyota
Honda
Nissan
Mitsubishi
Isuzu
Lexus
Mazda
Suzuki
Indian:
Tata
Frequency
3
1
9
3
2
33
12
14
5
2
2
1
2
1
216
Table 3
Table 3 illustrates there are a total of 216 individual from our sample of 233 that own a
car. As we can see Chevrolet and Toyota are the most own cars, also American and
Japanese cars are a lot in number from our sample. Once again this is leading to the
conclusion that in the population American and Japanese cars are most popular.
Once again we used Frequency analysis to find out which type of cars is most
popular. We used the variable Question 4 to figure this out. The following table is self
explanatory:
Type of car
4x4
Coupe
Hatchback
Frequency
14
5
1
15
Minivan
Sedan
SUV/Jeep
Truck
12
126
23
7
Table 4
From Table 4 we can deduce that majority of the cars on the streets are in fact sedans.
Even the majority of productions for most car manufacturers are sedans. This proves that
people prefer Sedans in comparison to other types of cars.
For the third time we used Frequency analysis to see from our sample how many
people owned New/Used cars. We used variable Question 7 to figure this out. The table
is shown below:
Car
New
Used
No car
Total
Percentage
57.10%
27.00%
15.90%
100%
Frequency
133
63
37
233
Table 5
Table 5 illustrates that 57.1% of our sample own new cars. So it can be suggested that
people to prefer buying new cars over used cars due to the complications they may cause
and this will lead to more chances of dissatisfaction.
C) Influencing factors on auto purchase decision
We conducted frequency analysis on variable Question 11 to see how many
individuals selected what in each category.
Not
important
Somewhat
important
Average
importance
Quite
important
Very
important
a)
23
60
97
b)
17
46
65
62
c)
16
20
55
50
53
d)
12
46
69
63
e)
11
40
59
80
16
f)
16
41
65
68
g)
31
60
94
h)
14
14
52
63
50
i)
31
21
55
51
36
j)
47
32
44
39
32
23
32
52
47
40
26
32
50
44
41
n)
18
17
39
66
54
o)
24
48
110
p)
30
53
96
Table 6
The numbers that are highlighted red in Table 6 are the highest selected within each
specific criteria. From this table you can easily interpret that a, e, f, g, o and p are very
important to most people since these were selected the most. b, d, h and n are quite
important. c, i, k and m hold average importance in peoples minds. Finally the most
chosen for j was not important. Being that this is a rich country some of these factors
would have been chosen abnormally due to the circumstances and situation (low fuel
cost) of people.
For variable Question 18 we used frequency analysis to see which factor holds
more important to people in comparison with the opposing factor. This is show below:
Vs.
Vs.
c) [122] Performance
Vs.
[107] Durability
d) [137] Performance
Vs.
Vs.
Vs.
Vs.
Vs.
Vs.
Table 7
17
From Table 7 (bold numbers are number of people that selected that factor) it is clear
which factors are more important in the minds of people when it comes to purchasing a
car.
Research Objective 2
D) Preferences for alternative financing options
Frequency analysis was conducted to find out how many individuals in our sample used
which different kinds of financing method and we found the following which is
illustrated in Table 7. The variable Question 10 was used to do this.
Frequency
64
86
Percent
27.46781116
36.90987124
2.145922747
7
9
2
10
11
2
196
37
233
3.004291845
3.862660944
0.858369099
4.291845494
4.721030043
0.858369099
84.12017167
15.87982833
100
Table 7
As you can see from Table 7 that 36.9% of the sample use Gift from a family member,
27.4% used Cash Payments to buy their car, etc. 15.8% reported nothing. From this we
18
can see that a lot of people that get a car in Saudi Arabia (Mainly the youth) get it as a
gift from their family member. And a significant amount use cash payments to purchase
their car.
Research Objective 3
E) Importance of different information sources in auto purchase
A combination of Frequency analysis and Descriptive was used to get how many
individuals used which Information source and what was the total average score out of
5. Variable Question 13 was used to conduct this analysis. Table 8 Illustrates this
Information.
Mean Usefulness
3.65
111
3.13
Manufacturers'/Dealers' brochures
3.22
95
TV advertising
2.88
96
Newspaper advertising
2.71
95
Magazine advertising
2.75
116
3.32
3.66
4.14
3.54
97
3.02
Car clubs
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Table 8
As you can see from Table 8 the column highlighted in Yellow displays the number of
people from the sample that used that Information source. The column highlighted
Orange shows the Mean score out of 5 that has been calculated for all the individuals
that used that source. We can conclude that the most used Information source was from
peoples own past experience which had the highest score of 4.14. The second most
used source was recommendation by family which scored 3.65, etc. The information
sources that scored the least were the advertising sources. Internet reviews seem to be
more affective that Advertising.
Referring back to Table 7 we see the following;
j) [ 53] Advertising information on the car
Vs.
Vs.
Vs.
Research Objective 4
F) Evaluation and Preference of Auto Dealers
By conducting Frequency analysis on variable Question 8 we found out from where
most of our sample bought their car from. This information is displayed in Table 9.
Frequency
Agent in KSA
131
Other dealer
55
20
Outside K.S.A
Not reported
38
Total
233
Table 9
If you refer back to Table 7, a and f you can see which factor is more influential to
majority of the sample when it comes to dealer preference. Ideally this would be the
same for the population.
For Evaluation of the Dealer we conducted Frequency Analysis to see how many
different Dealers our sample is customers of, this is shown in Table 10. To do this we
used variable Question 9, and also we analyzed how our sample evaluated dealers
over all with respect to 6 dimensions which is shown in Table 11, to do that we used
variable Question 14.
Agent or dealer
name
Frequency
1
Al-Yemni
Frequency
1
Abdul-Latif Jamil
27
Al-Zahid
Abdullah-Hashim
11
Ali Exhibition
Auto Star
Al-Domaly
Balubaid Automotive
Al-Hamrani
Al-Haraj
Al-Harraj
Juffali Automative
Al-Issa
Juffali Automotive
Al-Jaber
Khalid
Al-Jabir
Marhoon Exhibition
Al-Jadeedy Exhibition
Najd
Al-Jazirah
10
Sai'ary Exhibition
Al-Jumaih
12
Samaco
10
AAC Dammam
21
Al-Majdouie
Samaco Group
Al-Marhon
Al-Mulhem
Sulaiman M. Alhamzah
Al-Mutahida
Tamkelat
Al-Naghi Motors
United Motors
Al-Ohaly
Universal Motors
17
Al-Saif Motors
Zahid Tractor
Not Reported(Missing, no
car)
Al-Taveer
65
Table 10
These are all the different dealers present in our sample.
Different Dimensions
being measured:
a) Availability of spare
parts
b) Price of spare parts
c) Quality of technical
service
d) Labor charges for
service
e) Speed of service
f) Quality of customer
service
V.
Good
Excellent
Don't
Know
47
66
58
58
35
47
20
28
6
9
33
53
34
13
12
40
33
37
45
41
44
30
38
11
12
Poor
Average
Good
17
24
35
46
27
29
26
47
36
24
Table 11
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a market if they dont use the right strategies from the start and try to take advantage of their
customers their reputation will be bad for the years to come. You have to make the best first
impression.
2) People have different perceptions of different car brands. They stereotype Korean cars for
being unreliable and having weak bodies compared to Japanese cars being very reliable. But
from our analysis we can see that specific Hyundai in comparison with other Korean cars is
doing very well. If auto-dealers can improve their image in front of the customers using
better marketing techniques and improving the quality of their cars by making minor
adjustments here and there it will make a big difference.
6) Study Limitations
Some factors affected the perfection level of the study and forced the researchers to make
some choices in sampling and the type of analysis conducted on different variables to reach
to conclusions about each objective.
These factors are time constraints, limited resources and some cultural believes.
1) Due to time constraints a larger sample couldnt be reached and some of the
demographic variables were not analyzed very deeply.
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References
The following links have been used as a reference in our Introduction:
1) http://www.alrage.net/vb/t136417.html
2) http://www.dralsaif.com/articls/6.htm
3)http://www.asharqalawsat.com/details.asp?
section=6&article=258392&issueno=9441
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4) http://www.asharqalawsat.com/details.asp?section=6&article=82007&issueno=8445
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