The Impact Of Country Of Origin Effect On Automobile Purchase In Sri Lanka With Special Reference To Japanese And Indian Vehicles
Sri Lanka has increasingly developing market for automobile industry. Individuals tend to buy at least one vehicle for their usage. According to the statistics there is a considerable growth in automobile industry in Sri Lanka in past decades. But in recently there is a deduction of Car Registrations in Sri Lanka to 7793 in June from 8129 in May of 2018. But there is a significant growth of Car Registrations in Sri Lanka averaged 2326. 99 from 1997 until 2018, reaching an all-time high of 15017 in September of 2015 and a record low of 308 in January of 2010. For this situation, the impact of government tax regulation for automobile industry can be taken in to account. Due to the increase of import tax for automobile there is a decrease in importing vehicle to Sri Lanka. Even though, there is a little reduce in motor vehicle registration in Sri Lanka, when comparing to past months, but there is a considerable increasing in past years. Reasons for this increase in automobile industry or new registration of motor car has been encouraged by several factors such as increase in per capital income in middle class, less requirements for leasing facilities for lease a vehicle, vehicle permit issued for government employees, availability of vehicles at a lower price from various countries such as China, India, Malaysia, South Korea, etc. have largely contributed to the growth. These kinds of situation affected for the increase in motor car registration in Sri Lanka.
According to the statistics, Sri Lanka has imported vehicles from India was US $537. 79 Million during 2017, and also has been imported vehicles from Japan was US $667. 41 Million during 2017, most of these vehicles are automobiles. There is a competitive difference between Japan and Indian vehicle import to Sri Lanka. There are many factors people consider when they are going to make a purchase decision about automobile rather than other purchase decision as this is high involvement product. Among these factors the country of origin of automobile is key factor for purchase decision making. Because country of origin makes initial perception towards automobile brand name. According to research, consumers clearly use Country of origin to judge the products quality and the performance. However not only the perceived quality, but country of origin relates to perceived risk of product usage as well. It’s the negative or unexpected consequences that might occur after consumers have purchased the product. It is also evident that country of origin influences consumers ‘willingness to pay’. According to the (Gerald Häubl, 1996) states that when customers evaluate the automobile, the country of origin has a significant impact on that evaluation. According to Johansson J. D. , (1985) country of origin has either some cognitive, affective or behavioral intentions effect on purchase decisions made by customers. Country of origin has ‘cognitive’ effects when it influences attitude about product due to stereotyping of the country of origin. For example, consumers have a perception that products that come from developed countries are superior and vice versa. The ‘effect’ of country of origin is demonstrated by individuals who might rate a product as high, but still may not purchase it. At last, country of origin might be useful to shape normative influences upon ‘behavioral intention’ by putting social pressure on a consumer ahead of that persons’ evaluation of other product cues such as price or warranty information.
Researches also have found that when a consumer is not familiar with a country’s product, they will consider the country’s image as a product evaluation cue. Not only that country images may influence product evaluations in a negative or a positive way. The cognitive processes that lead to these evaluations have been researched extensively in various studies. Findings indicate that consumers use the country-of-origin cue symbolically, i. e. , as an associative link: Denmark — agriculture, France — fashion and design, Germany — technology and engineering, etc. Several studies have demonstrated perceptual linkages between country stereotypes and product categories. According to Gurhan-Canli, (2000) while a product’s COO has shown robust effects on its evaluation, the conceptualizations of COO effects are more diverse. These range from the extent to which the place of manufacture influences product evaluations. However, there are number of factors that complicate the study of how country of origin affects the consumers’ evaluation of products. Such as the complexities of the product itself. The finding that an automobile’s country of origin has a significant impact on consumers’ perception of the various features of an automobile and on their evaluation of the car as a whole – even in connection with a very strong brand name – should encourage companies to investigate thoroughly consumers’ perceptions of the relevant countries and their car industries, as well as consumers’ evaluation of the manufacturer’s models when associated with the potential countries of origin before making a decision on the location of a production facility. Thus, the country of origin of automobile has an important role when deciding purchase decision of automobile.
In Sri Lankan context, automobiles are imported from various countries such as Japan, India, Korea, China, German, USA, UK, France. These countries are perceived to have different characteristics, such as some are known to be developed industrialized countries and some are known to be emerging or developing countries, as a result consumer tend to develop stereotypes as stated above, and those would ultimately lead to have an impact on the automobile purchase decision of Sri Lankan consumers. Mainly most of the automobiles are imported from Japan and India. .
