Consumer Purchase Patterns and Buying Decisions In The Auto Industry of Pakistan [Infographic]

In an economy like Pakistan, automakers have to make tough decisions on a daily basis regarding the prices of the vehicles. Despite their best efforts, they are criticized by the most important stakeholders of the industry i.e. the consumers.

The prices set by the automakers have a huge impact on the purchase decisions of the consumers. Automobiles are considered high involvement products which means they require a considerable amount of thinking and investment from consumers when they are in the market to buy one.

To find out the impact of car prices in Pakistan on the buying decision of consumers, conducted a survey of close to 10,000 people from around the country. The participants involved in the survey consisted of people from all walks of life and majority of them were between the ages of 18 and 50 years.

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According to the results, of all the people who buy cars, 55% buy second hand or used cars. The number is huge and it reflects that brand new cars are out of the reach of most people in the country with only 32% of the people using new cars. If we compare this number with the average of Asia Pacific region then we are far behind. A recent study of Nielsen – a globally recognized provider of information and insights – revealed that 65% people in Asia Pacific region prefers new cars and 7% people prefer used cars.

Although, people cannot afford new cars in the country, yet they prefer to buy their cars on a cash basis rather than through a car financing facility or an auto loan. The results revealed that 65% of the people buy their cars on cash compared to 24% of the people who go for car financing or auto loan. The reasons behind that are the high markup on loans and lengthy procedures and exhaustive paperwork and documentation.

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The survey further revealed that 30% of the people buy cars that cost between one million and two million rupees. The most lucrative price segment remains the sub-one million rupees segment with 50% of the people spending less than one million rupees on buying a car. This is also evident from the abundance of small hatchback vehicles on the roads. These vehicles are not only cheaper to buy but also are easier to maintain.

Prices of new cars are constantly going up and this is an alarming situation for you if you are an automaker as 80% of the people prefer to buy cars that cost under two million rupees. This is also a reason why people prefer used cars over new ones as the midsize family sedans such as the Civic and Corolla Altis cost well above two million rupees when we account for the taxes and registration charges on these.

Our auto industry needs serious reforms or else the situation would go out of hands beyond all reconciliations.

Note: PakWheels conducted the study and prepared the infographic used in this post

Talal is the Editor in Chief at ProPakistani. Reach out at [email protected]