The Indian automobile market is expected to grow at a compound annual growth rate (CAGR)of 9.5 % amounting to Rs. 13,008 million by 2010. The contribution of the commercial vehicle segment has been tremendous to the growth of the automobile industry.

The contribution of foreign companies in the automobile industry in India is in terms of technology transfers, joint ventures, strategic alliance and financial collaborations.

The purchase of motorcycles and cars in rural as well as urban areas is increasing. In India, the sales figure of major car manufacturers was 67.4 lakh units for the year ending March 2007, whereas that of export of cars was 39, 295 units.

It is known that the B segment forms the largest part of the consumer vehicle market in India. With the boom in the Indian economy post 1990s, a large number of consumers have graduated from two wheelers to cars, thus leading to a book in the B segment market. The B segment car market constitutes the like of Maruti 800, Alto, Wagon R, Hyundai Santro, Tata indica and Fiat Palio. Now with the increasing income levels, consumers are opting for more than one car per family, with the second car generally belonging to the B segment.

A study was carried out to understand what influences the purchase of B-Segment cars in India. Exploratory research was conducted in the form of personal unstructured interviews with B-segment car users. A lot of literature was also reviewed on the subject. Based on the insight obtained from the exploratory research, a number of variables were identified that influence consumers buying behavior in B-segment cars. Using the information identified, a questionnaire was prepared. A part of the questionnaire seeking information on the importance of consumers attach to various attributes is reproduced below. A sample of 100 current car owners of B-Segment cars in the NCR region was conducted for filling up the questionnaire. Only 75 responded to the survey. The question seeking information on the criterion for the purchase of B-Segment car was phrased as:

How important according to you are the following criteria in the purchase of B-segment cars? Please rate them on a 7-point scale (where 1= extremely important 7 extremely unimportant) by putting a tick mark at the appropriate place.

Criteria:

1. Price on road (X1)
2. Brand name (X2)
3. Engine capacity (X3)
4. Looks and design (X4)
5. Fuel efficiency (X5)
6. Discount schemes (X6)
7. Resale value (X7)
8. After sale services (X8)
9. Running and maintaining cost (X9)
10. Convenience features (X10)
11. Purpose of purchase (X11)
12. Performance information available (X12)
13. Driving pleasure (X13)
14. Car image and positioning (X14)
15. Economical (X15)
16. Colors available (X16)
17. Advertising and marketing (X17)
18. Safety (X18)

Conduct a factor analysis to identify the underlying factors that are important to the buyers of B-segment cars. Give appropriate names to the factors.