Factors Influencing Automobile Industry & Consumer Behavior In Australia

Australian automobile industry growth since the 20th century

Question:

Research Topic:- Cultural Influence on Consumer Behaviour (Automobile Industry) in Australia (Sydney & Melbourne)

Structure
• Introduction 
• Litrature Review
• Methodology
• Data analysis
 

From the 20^th Century onwards, the Australian economy has witnessed a huge growth in the automotive industry. In fact, with the production of the first Australian car brand Ford Motor Company, the nation has started gaining wide recognition across the globe, for the production of well-designed larger size passenger cars. The consumer behavior is a very important trait that any industry, located in any nation, should take into serious consideration, as it helps one to comprehend the reason, as to why the buyers of an economy choose to purchase or do not choose to purchase a product. Now, among the several factors which influence the consumer behavior of a nation, one of the most important one is the cultural factor. Hence, this research aims to discover and analyze what set of beliefs, values and ideas determine the consumption of automobiles in Australia (Dowling 2016).

• To analyze how far the price of the fuel affects the consumers of the Automobile Industry
• To discover how far the Australian’s passion for sports influences his car consumption decision
• To investigate why there is a lesser demand for public transport system as compared with the private transport system 

Increase in Fuel Price and its Effect on Australian Consumers:

The fuel price has been increasing over the last few years in Australia. The reason behind such sudden and steady increase in fuel price may be accounted to the change in value of Australian dollar in comparison to the US dollar, or to the pricing strategy as determined by the retailers. Whatsoever be the reason, recent research has suggested that the increase in fuel price has stood as a major impediment to the consumption of cars in Australia. The consumer optimism is not so strong, as to suggest a possibility of growth of the automobile industries in recent years. Car itself is a luxury product, and not a necessary one (Aip.com.au 2016).

Figure 1: Growth Rate of Motor Vehicles in Australia over the Years 

As the above graph shows, there has been a rise, followed by a decline in the sale of automotive industry, starting from the year 2000 and continuing until 2012. The very reason behind such decline in consumption rate of the cars is the ever-soaring price of petrol, as discussed earlier. Owing to this, many consumers of Australia are recently preferring imported cars which come with two benefits- (i) they are far more affordable than Ford or Holden, and (ii) these vehicles are also fuel efficient, helping the consumer to save much on the amount of petrol spent with each time the consumer drives the vehicle.

While speaking of the cultural factors influencing the consumer behavior in their purchasing decision of a car, special attention must be given to the point, which Lancaster has made. According to him, in buying a car, just a single product does not drive most of the consumers, but the collection of the features it promises to its buyers does. Netpop Research Authority has conducted a recent research that has shown how the buyers, since a last few years, has engaged themselves in extensive research of the car, before they are making their purchasing decision. In fact, the Nielson Report had already suggested in the year of 2012, that the Australian car consumers, who either intend to buy first hand cars or the used cars, rely much on the online sites. Hence, the review by the buyers and the online presence of the car brand largely affects their consumption behavior.  Hence, the Nielson report suggests that the Australians are no longer remaining content with the claims, promises and assurance by the automobile companies, but are rather cross checking and validating such claims via online sites (Iabaustralia.com.au 2016).

Increase in fuel prices affecting Australian consumers

Further, there is much public transport problem in cities of Australia, such as Melbourne. In fact, it comes as a shocking fact that only a third of the city enjoys train facility and only a quarter enjoys the facility of a tram. Under such extremely poor condition of transport system, most of the people prefer to rely on the use of cars. It is a much known fact that the Australians prioritize punctuality above everything else. They are very organized and professional in their workplace, and hence their strict sense of punctuality prevents them from getting late in reaching their destinations. Keeping this fact in mind, most of these people prefer to consume cars, rather than relying on poor transport system, for reaching their workplaces (Landed and Landed 2016). Furthermore, since Australia enjoys a very low population, it has sufficient place to move around and play with. Hence, buying a car and taking a drive in Melbourne or in Sydney is a very desirable thing for the Australians. A recent research has suggested that the increase in fuel price, although had a disastrous impact on the average sale of cars, proving a considerable loss to the automobile industry, it could scarcely affect the affluent, or even the upper middle section of the society. The Australians apparently have an instinctive love for cars, and the affluent ones are more prone to buy the highly branded, luxury cars. The Australians have always possessed an innate sense of love for freedom. They always have had a passion for the freedom to move , wander and play around wherever they want. The Australians have this spirit of freedom as well as indulgence rooted in their psyche, and in addition to that, the huge spacious cities of Sydney, Melbourne, New south Wales or Queensland absolutely allure them to explore the space around and travel by cars. The sense of a strong individuality so much deeply rooted in the Australian mindset does not let them explore the journey of life depending too much on the public transport (NewsComAu 2016). Hence, in comparison to the public transport systems, the automobile industries benefit much more from the growth in the sale rate of the cars.

Figure 2: Growth Rate of the Total Number of Car Consumption in Australia between 1955 and 2013

However, although the Australian love for cars has somewhat helped in restoring the profit of the Australian automobile industry, the public transport vehicles, such as trains and trams do not benefit the automobile industry much. This is simply because very few people are indeed content with the service provided by the public transport vehicles. First of all, being one of the most less populated countries in the world, it already has comparatively lesser demand for public transport vehicles. In addition to this, almost 53% of the Australians complained about the difficulty of accessing public vehicles. Being very punctual people, more of them are moving towards private cars, creating a much lesser demand for the production of public transport vehicles (Anon 2016).

Consumer behavior in Australian automobile industry

While talking of the Automobile industry in Australia, it would be injustice to eliminate the sports car from the discussion. In fact, the Australian affection for sports, as a whole is a widely known fact. This love for sports does not remain confined to just Football and cricket, but the enduring love extends to car racing sports as well. This very reason has accounted for a heavy growth in the production as well as total sales of the sports cars in Australia, in recent times. In fact, a study held by VFACTS has suggested that a major part of the Australians are more than willing to spend a whopping amount of $1,00,000 for purchasing a sports car. Presently, around 2000 sports cars are sold every day in Australia, and companies such as Toyota 86, and Audi TT, have been able to capture the hearts of majority of the Australians, as some of the most iconic sports cars of the century (NewsComAu, 2015).

For conducting the research, with the objective of understanding the cultural factors influencing the growth of the automobile industry, the researcher has taken help of the quantitative method of data collection. The researcher has aimed to understand the cultural values and ideologies of the Australians which influence their car purchasing decisions. For this reason, he has investigated the matter, by getting a statistical information as to how many of them prefer private transport and how many would like public transport. Further, the reason for choosing each, and even the reason behind choosing a particular kind of car, has been studied and summarized before generalizing the conclusion. As a quantitative method of research, the researcher engages a survey based research, in which questionnaires were being distributed among the selected respondents. The sampling method chosen for conducting the research was stratified Sampling method whereby the researcher has divided the population into two halves- the ones who belong to either the upper middle class or the affluent class using private transport, and  the ones who belong to low middle class, using public transport. The sample size of 100 has been considered for completing the research.

1.Does the price of the fuel make you buy smaller cars rather than the luxury ones?

Response	Percentage of the Respondents
Yes	75
No	23
Maybe	2

2.Do you prefer Sport car more than the ordinary ones?

Response	Percentage of the Respondents
Yes	85
No	10
Maybe	5

3.Do you prefer privately owned cars or the public transport vehicles?

Response	Percentage of the Respondents
Yes	90
No	4
Maybe	6

As per Question 1, according to 75 % of the respondents, the increase in the price of the fuel has been a discouraging factor for buying huge cars, and hence they expressed their desire of buying small cars, which are to a considerable extent fuel-efficient. The findings showed that the Australian consumers showed lesser inclination to buy anything except luxury cars or small cars. So, the automobile industry of Australia is apparently not making much profit out of the sale of medium priced vehicles (Google Books 2016). In fact, approximately 90 % of the upper middle class Australians respondents reported that while purchasing a car, they are usually motivated by their desire to buy light and small cars, such as Toyota or Hyundai when they are considering to save on their fuel expenses.

Online presence and reviews affecting automobile industry in Australia

As per Question 2, out of 90 % of the Australians who were studied, it was discovered that both the young men as well as the women, happen to experience a joyous feeling of freedom and independence while driving their own cars. It is not much a status symbol for them, as much as an activity they connect with the idea of economic as well as spiritual freedom. This is because, the Australians said that they prefer to buy luxury or sports cars more than normal cars. Their investment in luxury cars, such as Mercedes AMG model indeed proves to be very beneficial for the automobile industry as a large number of consumers are attracted to the luxury cars. Keeping this in mind only, the Federal Chamber of Automotive Industries has put strong emphasis on the production of expensive luxury cars (Tucker 2016).

As per Question 3 ,on being asked about the preference of private transport systems over public vehicles, a large number of Australians showed their inclination for the former, which they either already use or are willing to consume in near future. Among the respondents studied upon, the average preference for purchasing private cars as opposed to avail public transport systems was discovered as a promising trend (Child Family Community Australia, 2016).

Figure 3: The Australian Preference for Consumption of Privately Owned Vehicles

Conclusion and Recommendation:

The cultural views and ideology of the consumers play a significant role in influencing the consumption of any product. The outlook of the consumer as well as perspective he owns about life, largely determines as to what he consumes. The researcher in the above research report has attempted a cultural study of the Australians and accordingly has attempted to analyze its effect on the consumer behavior of the automobile industry (Economy, doors and Australia 2015). It was being discovered that the Australians love sports cars, and hence the Automobile industry should invest more on the manufacture and production of sports cars. Further, as there is nt much demand for public transport vehicles, the automobile industry should invest less on the production of public vehicles, and more on privately owned cars. The increase in the fuel price, although is more of an economical factor, but since it affects the cultural behavior of the consumers to purchase small cars, the automobile industry must take measures. To reduce the fuel price is not a function of the automobile industry, but what it should do is to produce more of fuel-efficient vehicles. The Australian automobile industry should focus to produce more 5 star rated cars , rated in terms of their fuel-efficiency power. Hence, greater investment on Toyota or Fiat 500 is needed instead of SSangyong Korrando, which showed an approximate amount of 106g/km CO² (Fcai.com.au, 2016).  

Reference List: 

ABC News. (2016). Petrol retailers asked to explain high profit margins.

ABC News. (2016). Public transport: Why are people shunning this daily circus?

Child Family Community Australia. (2016). 

Dowling, J. (2016). The future of the Australian car industry – once the factories close.

Economy, T., doors, A. and Australia, T. (2015). 

Hawthorne, M. (2016). Australians buy more Mercs than Fords, as luxury car sales surge.