Country of origin effect on car ownership choice decision of Indonesian consumer

Abstract

The continuous economics improvement of various developing countries has led to a significant increase in the global demand for cars. The rapid technological development in automotive industries create strong expansions of several manufacturers, such as Chinese automakers, to expand their business. Nevertheless, Chinese automakers face challenges in establishing a strong presence attributed to the “Made in China” stigma among consumers compared to other car manufacturers such as Japan automakers. This study aimed to analyze the factors influencing Indonesian car consumers' purchase decisions through a stated choice experiment. With D-efficient design we developed the scenario based on nine alternatives and seven attributes. A total of 590 respondents in Jakarta, Bandung, and Surabaya completed a questionnaire, consisting of two parts: scenario selection, and socio-demographic information. For scenario selection, respondents chose 1 out of 9 available alternatives, excluding opt-out, each in eight different scenarios. In the socio-demographic information, respondents were asked to fill in their profile, including age, gender, origin, educational level, type of job, and monthly income. We used the mixed multinomial logit model as the analysis tool for statistical measurement. The findings show that Indonesian car consumer exhibit a lower preference for Chinese cars compared to Japanese cars. Socio-economic variables, such as age and occupation, also influence car-buying decisions. Moreover, Indonesian consumers place varying significance to attributes when evaluating alternatives, with engine capacity, fuel efficiency, safety system, and exterior-interior design, and price being significant factors shaping preferences. While price is crucial, the overall value proposition of the car guides consumer decisions. Chinese car manufacturers should enhance these attributes to appeal to Indonesian market and expand their market share.