Motorized Vehicle Purchase in Surat, India

Abstract

As India's economy grows, so does its rate of car ownership. Motorized two-wheelers had been the prevalent mode of personal transport in the country. With improving economic conditions, more households are buying and using cars, and large cars are being introduced in a market that consisted primarily of small cars. This study assessed the trends in the future composition of motorized vehicles in the Indian city of Surat by analyzing a cross section of consumer purchases across used and new motorized vehicles, namely, two-wheelers and different size categories of cars. The findings have potential use in informing policies on infrastructure development and in controlling the negative externalities of car use. Data were obtained through home interview surveys of Surat residents who had recently purchased a motorized vehicle. To explain the vehicle choices of these residents, different observed attributes of the vehicles and their owners were considered. It was hypothesized that latent attributes (e.g., careful spender behavior, perception of status, and negative image of nonmotorized and public modes) may play an important role in the choice of personal vehicles, which are prohibitively expensive in India. To test this hypothesis, latent attributes were obtained as explanatory variables through factor analysis of responses to Likert scale questions pertaining to such attitudes and incorporated into the model. An integrated choice and latent variable model was used for this analysis. The results indicate that while household size does affect the size of vehicle purchased, small vehicles, in addition to lower fuel costs and larger engines, are generally preferred. The results further indicate that observed variables are more significant than latent ones in explaining vehicle choice.