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 Europe (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 car 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 cars 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 • Van, minivan - 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. Toyota, Citroen and Peugeot also entered this sub segment with cars like Toyota Aygo, Citroen C1 and Peugeot 107. The next group is represented by supermini cars like Fiat 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, Opel Corsa, Peugeot 207 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 Ford Focus, Citroen C4, Peugeot 307 or Renault Megane. However, in the superior medium class there are still the traditional medium class cars like Ford Mondeo, VW Passat and Renault Laguna, 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 Peugeot 1007, because they are small cars but a little taller. The bigger ones, like Opel Zafira, 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 minivans 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 (sport utility vehicle) class, we can identify two major segments – the compact SUVs (Land Rover Freelander, Nissan X-Trail, Kia Sportage) and the big SUVs (Nissan Pathfinder, Toyota Land Cruiser). However, this two categories can also be divided into traditional off-roaders (Land Rover Defender, Mercedes G Klasse, Mitsubishi Pajero), 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, Nissan Navara 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.