CUSTOMER BEHAVIOR ANALYSIS FOR THE ROMANIAN AUTOMOBILES MARKET

STATISTICS PROJECT

PROFESSOR: DANIELA SERBAN

STUDENT: Ciresaru Ana Georgiana

GROUP:131

ASE, 2013 - Table of contents -

1. Introduction

2. Presentation of the Romanian automobiles market

3. Methods used for doing the research

4. Case study analysis

5. Conclusions

6. References

1. Introduction

2 With a population of 21.6 million Romania is the third largest market in terms of population in Central and Eastern (CEE) and the 7th largest among the European Union member states. However, Romania is one of the less wealthy nations within the E.U,

Romania’s penetration is still much lower than in Western European markets and also most other CEE markets like Poland or Bulgaria. In terms of car park however, Romania is among the top CEE markets. As in most other CEE markets, the car park is relatively old. 50% of are older than 10 years.

Since Romania became a member of the EU in 2007, the import of used cars has increased significantly. These imports mainly consist of cars which comply with the Euro 3 - emission standards. Romania is actively trying to prevent a further increase in older used car imports. A government initiative to pay people for scrapping their older cars and buying a new one is helping to boost the new cars market.

Financing of cars is well established, with loan financing and leasing being equally preferred by private individuals and leasing being the preferred method by corporate buyers. Financing used car purchases is also widespread.

The purpose of this project is to analyze consumer behavior on the Romanian automotive market. The subject of the research consists of the adult male and female citizens of Romania who own a car. In the investigation process, primary data was collected. The method of data collection used was online survey. There were collected the responses of 121 persons.

The objectives of this research are: to observe the characteristics of the Romanian car park, to determine the features of a car which mostly attract consumers and to rank the mostly preferred brands.

2. Presentation of the Romanian automobiles market

3 The automobiles market can be segmented into touring cars and commercial motor vehicles, a category which includes minibuses (<3.5 tons) and buses (>3.5tons).

Moreover, each category can be segmented according to engine capacity, motor power, type of fuel used and fuel consumption, equipment, target market and so on. These classifications change frequently because new technologies appear and the old classifications must adapt in order to include them. Currently there are five main classes of touring cars:

• Small and very small class • Medium class • Premium class • , - MPV, mini MPV • SUV

Small and very small class

The auto vehicles included in this category can be divided in three segments: city-cars, supermini and mini. The cars belonging to this class target young people from urban areas with medium income. These cars are used mostly in urban areas because they are, as the name of the class states, small, thus easy to park and to wiggle in traffic. Moreover, they can be used mostly by persons who don’t have yet a family because there is not enough space in a car of this type to put too much luggage or to transport many people. Furthermore, these cars are not very expensive, their prices ranging from approx. 7.000 euros to 20.000 euros, the prices staying high because of the advantages offered like low consumption of fuel.

The smallest cars in this segment are called city-cars, the most representative being Smart. , Citroen and also entered this sub segment with cars like Toyota Aygo, Citroen C1 and . The next group is represented by supermini cars like Panda, Citroen C2, etc. which are followed by the mini cars which can get to a length of 4 meters and width of 1.5 meters. In this category, we can find Citroen C3, Fiat Punto and Grande Punto, Volkswagen Polo, Corsa, and others.

4 Medium class

In the medium class we can find a large array of cars, being the best sold on the market. They target medium to high income people, mature persons with families, both from urban and rural areas. These cars are used mostly by families because they can transport five persons with luggage without losing the comfort. Their prices are somewhat similar to those from the previous category. These cars can be found all around the country because they are affordable to most Romanians, if we consider that a new Dacia Logan or Sandero can be bought for about 7.000 euros.

In this category there are some sub segments, the cars mentioned above being included in the inferior medium class, while there is another subcategory, the superior medium class, where we can find more expensive cars like , Citroen C4, or Megane. However, in the superior medium class there are still the traditional medium class cars like , VW Passat and , but which try to step up in the next class, the premium segment.

Premium class

This segment includes three divisions which are: executive, premium (compact) and luxury. This fragmentation was made for marketing and price purposes. They target people with high income, mostly from urban areas. A person who owns such a car most of the times is in his 30s-40s, has a good career and can afford to keep such a car. The prices for these cars start from 20.000 euros and can go up to thousands euros.

For example, Audi targets the premium class with A3 for the premium compact segment, A4 for the executive compact segment, A6 for the executive segment, and A8 for the luxury segment. Thus, the premium (compact) class is weaker than the executive class and is the segment towards which the superior medium cars tend, some having already equipment more expensive than executive compact cars.

5 Van, minivan - MPV, mini MPV

Monovolumes are the cars which created a lot of problems for marketing specialists because the great demand for this type of automobiles led to an unexpected diversification of production. MPV means Multi Purpose Vehicle, but the name has nothing to do with the monovolume bodywork. The smallest MPVs are considered to belong to the small class, some examples are Renault Modus or , because they are small cars but a little taller. The bigger ones, like , were named miniMPVs. This segment offers some advantages, like having two folding chairs in the back which offers the possibility to transport seven persons instead of five. The standard MPVs are the old american which are not considered touring cars, but are included in the minibuses category (<3.5 tons). The cars from this category are mostly used by legal persons, for merchandise transportation. However, natural persons can also own such a car, farmers and numerous families prefer them.

SUV

In the SUV () class, we can identify two major segments – the compact SUVs (Land Rover Freelander, X-Trail, Sportage) and the big SUVs (, Toyota Land Cruiser). However, this two categories can also be divided into traditional off-roaders (Land Rover Defender, Mercedes G Klasse, ), premium SUVs, executive (BMW X5, Audi Q7, Land Rover, Range Rover) and sport (VW Touareg, Range Rover Sport). Finally, we can end with the pickups off-road or tracks like Mitsubishi L200, or Toyota Hilux. These cars are mainly bought by high income people, both from urban or rural areas, many of them being part of the top management or owners of a company.

The cars from all the classes can be owned equally by legal and natural persons. The choice of a company for a certain type of car depends on the company’s activity and needs. Some

6 companies would prefer small city cars for some medium level employees or pickups for delivery. However, most of them firstly buy luxury cars for top managers.

Romanians mostly prefer cars from the medium class, which have an average price of 15.000 euros. They like family cars with spacious trunks, which have good fuel consumption and can adapt both to urban and extra-urban driving.

In 2009, the top of Romanians’ preferences was made by Dacia (28.3%), Volkswagen (7.4%), Hyundai (7.4%), Ford (7.1%) and Renault (6.8%).

In urban areas, there is also an increased demand for small cars, because they have good fuel consumption, they can be parked easily and have good prices. Nevertheless, there is still demand for luxury cars and SUV, but the figures decreased significantly.

A study made by INSSE for the period between January 2007 and June 2009, showed that there are 5.5 cars registered per 100 inhabitants out of which 3.1 are new cars and 2.4 second hand. 3. Methods used for doing the research

7 Any market research is based on collecting, analyzing, presenting and interpreting data. Data can come from actual observations or from records that are kept for various purposes. Primary data represents facts and information which were collected with the specific purpose of a particular investigation, while secondary data represents facts gathered for other purposes, but which are useful for a particular investigation. In general, secondary data is to be found in published sources, being available rapidly and without great efforts, but on the other hand primary data takes a lot of time and is usually expensive. Despite these aspects, primary data benefits from accuracy as it presents latest information, while secondary data always relates to past periods.

Data can assist decision makers in order to pursue educated guesses about the causes and therefore the probable effects of certain characteristics in given situations. In addition, knowledge of trends from past experience can enable researchers to be aware of potential outcomes.

Among the most common ways to gather information, the following methods can be considered: literature review, focus groups, personal interviews, mail/online surveys and telephone surveys. The questionnaires are tools used in more than one of these methods. The data obtained in this way is easily recorded and analyzed using software packages. At the same time, the questionnaires offer the advantages of reducing bias and being less intrusive than telephone surveys, being cost effective and familiar to most people. On the other hand, they can generate low response rates which can dramatically diminish the confidence in the results, they offer little flexibility to the respondents and they lack the feedback from the gestures and visual cues.

The success of the questionnaire depends on how well the goals of the research have been expressed, on the length (usually shorter questionnaires are preferred), on a meaningful title and concise instructions on how to be completed, on the use of a simple and direct language, as well as on the ability to hold the respondent’s interest.

8 Researchers gather data from samples, afterwards using this information to make inferences about the entire population. They study the samples in order to be able to describe the behavior of an entire population.

When data are arranged into compact forms, the decision makers can take from them reliable information and use it to make smart and profitable decisions. Today, computers allow statisticians to collect enormous amounts of observations and easily compress them into tables, graphs and numbers.

For interpretation statistical programs are used. Employed in the work of researchers in all fields, and mostly in social sciences, the following basic features are used: statistical analysis, data management and data documentation. The software includes descriptive statistics (cross tabulation, frequencies, descriptives) and bivariate statistics (means).

4. Case study analysis

9 The first question was requiring the respondent’s to say whether they own a car or not. To this question, 121 gave a positive question.

The second question asked if the owner bought the car new or used. The answers were 64% for new, and 36% for old. Their answers are complying with the results of INSSE study for the period between January 2007 and June 2009 which showed that there are 5.5 cars registered per 100 inhabitants out of which 3.1 are new cars and 2.4 second hand.

For the third question, the respondents had to give the year in which the car they currently own was produced (see Table 1). The average year of production is 2003.62 which shows that the cars are relatively new. The standard deviation, which is 7.2, measures the dispersion of the individual values of the variable around the arithmetic mean. The coefficient of variation is close to zero, which means that there is a low variation of variables, the sample is homogeneous and the mean is representative.

The median is 2005 which means that half of the cars in the sample were produced in or before 2005 and the other half were manufactured after 2005. The mode is 2007, thus the most frequent year in which the cars in the sample were made, is 2007. The range, the difference between the newest (maximum) and the oldest (minimum) car is 46 years.

10 Table 1. Statistics

Year

N Valid 121

Missing 0

Mean 2003,62

Median 2005,00

Mode 2007

Std. Deviation 7,200

Variance 51,838

Skewness -3,240

Std. Error of Skewness ,220

Range 46

Minimum 1965

Maximum 2011

Percentiles 25 2002,00

50 2005,00

75 2007,00

The coefficient of skewness has a value of -3.24 which means that, in the sample, there are mostly large number (see Figure 1).

Figure 1

11 The forth question asked the respondent to say to which brand his car belongs. According to their responses, the mostly preferred were Opel (14%), Dacia (12%), Ford (10%), Skoda (9%), Renault (7%) and Volkswagen (7%). Although Dacia is leader on the market of new cars, when it comes to a market of old and new cars some other manufacturers may be preferred, as in this case it appears to be Opel (see Figure 2).

Figure 2

12 For the fifth question, the car owners had to classify several factors according to their importance in choosing the brand. Thus, as it can be seen in Figure 3, the offer made by the dealer was considered to be the most important. Second was the design of the car, being followed by the price. Less important were safety, quality – price ratio and performance.

Figure 3

13 The next question was about how much they paid for buying the car they currently own. In Figure 4 it can be seen that Romanians prefer cars which cost less than 20.000 euros.

Figure 4

When they had to say which type of fuel their cars consume, 68% said they have cars which function with gas, and 31% stated that their cars are working with diesel.

Figure 5

However, when they had to say what type of fuel they would prefer, the majority of the respondents chose diesel (Figure 6).

Figure 6

As it can be seen, some of those who had cars using gas would rather change their cars with ones which function with diesel or GPL. The reason for this change of mind would be the difference in consumption, since it is known that a consumes less fuel per 100

14 km. Moreover, GPL and even diesel are cheaper than gas. Nevertheless, there were some who only thought about the fact that some engines are better performing when using another fuel (see Figure 7).

Figure 7

The next question asked the respondent to which class its car belongs. The majority said that their cars belong to the medium class, being followed by those who had cars from the “city car” class. Few had cars from the premium, SUV or van/minivan classes (see Figure 8).

Figure 8

15 Usually cars which belong to the mini or medium class have prices smaller than 20.000 euros, which is in agreement with the responses to the question about the price each car owner paid for acquiring his car (see Table 2).

Table 2. price * car Crosstabulation

Count

car

clasa ‘city car’ (mini super clasa mini) clasa medie clasa premium clasa SUV van/minivan Total price <10.000 euro 22 34 0 0 0 56

10.000-20.000 euro 8 28 4 4 4 48

20.001-30.000 euro 0 3 5 1 0 9

>30.000 euro 0 0 3 5 0 8

Total 30 65 12 10 4 121

The next requirement was to choose the type of bodywork the car of the person’s interviewed had. The answers were 45% in favor of Sedane, 34% for , while and SUV got each 7% of the votes.

Figure 9

The class to which a car belongs is mostly related to the bodywork of that car, some classes having even the same name with the bodywork (SUV, van, etc.). In Table 3, we can observe

16 that in the city car class there are only hatchback cars, while in medium and premium classes there is more variation, there being cars with hatchback, sedane, cabrio and coupe bodywork.

Table 3. car * bodywork Crosstabulation

Count

bodywork

hatchback sedane Coupe cabrio suv van/minivan Total car clasa ‘city car’ (mini 29 0 0 0 0 0 29 super mini)

clasa medie 9 48 8 0 0 0 65

clasa premium 2 7 1 2 0 0 12

clasa SUV 1 0 0 0 9 0 10

clasa van/minivan 0 0 0 0 0 4 4

Total 41 55 9 2 9 4 120

When asked if they would give their cars for ones with different bodyworks, most (87%) respondents said that they are satisfied with the bodyworks of their cars. Only 13% would change their cars for some sports cars (cabrio or coupe bodywork) or SUVs.

Figure 10

In the sample, there are mostly young persons, 41% belonging to the 18-30 years group, and

43% having between 30 and 50 years old. Only about 16% are older than 50 years.

Table 4. age

Frequency Percent Valid Percent Cumulative Percent

Valid 18-30 ani 50 41,3 41,3 41,3

30-50 ani 52 43,0 43,0 84,3

peste 50 ani 19 15,7 15,7 100,0

17 Moreover, in the sample there was almost equal number of female and male respondents, the difference being made by one individual (see Figure 11).

Figure 11

As it can be seen in Table 8, female respondents preferred hatchback and coupe car’s bodywork, while men chose sedane, SUV or van.

Table 8. gender * bodywork Crosstabulation

Count

bodywork

hatchback Sedane coupe cabrio suv van/minivan Total gender feminin 32 20 5 1 2 0 60

masculin 9 35 4 1 7 4 60

Total 41 55 9 2 9 4 120

Moreover, as it is presented in Table 9, females own mostly city cars and medium cars, while men tend to have cars from the medium, premium or SUV class.

18 Table 9. gender * car Crosstabulation

Count

car

clasa ‘city car’ clasa (mini super mini) clasa medie clasa premium clasa SUV van/minivan Total gender feminin 25 28 4 3 0 60

masculin 5 37 8 7 4 61

Total 30 65 12 10 4 121

Concerning respondent’s occupation, most of them are employed (69%), being followed by those who are students (19%), retirees (9%) and unemployed (3%).

Figure 12

As it can be seen in Table 10, students mostly own hatchback cars, while employed persons have more sedane cars.

Table 10. occupation * bodywork Crosstabulation

Count

bodywork

hatchback sedane coupe cabrio suv van/minivan Total

Occupation student 14 3 4 0 2 0 23

salariat 26 41 5 2 6 3 83

somer 1 3 0 0 0 0 4

pensionar 0 8 0 0 1 1 10

Total 41 55 9 2 9 4 120

19 The last question was referring to the level of monthly earnings each respondent had. Among them, 33% earned between 2001 and 3000lei, 24% received more than 3000lei, while another 24% got between 1000 and 2000lei for their monthly work. About 19% had earnings less than 1000lei.

Figure 13

5. Conclusions

From the results of this survey, we can conclude that the government’s initiative to pay people for scrapping their older cars and buying a new one is really effective, since most of the respondents bought their cars new, and many in the recent years.

We have also seen that people prefer cars from the ‘city car’ or medium class, hatchback and sedane being the favourite bodyworks. Females and students chose to own small city cars, while men, mostly employed, are driving cars from the medium and premium classes.

Moreover, although many drive cars which use gas as a fuel, they would prefer diesel cars. The reasons are several, but the most important would be the fact that engines which consume diesel are using less fuel per 100 km. Also some would rather use GPL because is the cheapest fuel on the market.

20 6. References

Levin, I. R., Rubin, D. S. (1980) “Applied elementary statistics”, Prentice Hall Printing House

Mitrut, C., Serban, D., Mitrut, C. A. (2003) “Statistics for Business Administration”, ASE Printing House http://goliath.ecnext.com/coms2/gi_0199-934872/Primary-and-secondary-data- concepts.html http://www.globis- berlin.de/de/Marktforschung/Studien_und_Reports/Automotive_Research_Reports/Romanian _Automotive_Market/index_html http://www.statpac.com/surveys/

21