Title of the paper: Indian Passenger Car Industry and its service quality.
The Name(s):
1. D.Muthukrishnaveni
2. Dr.D.Muruganandam
Address(es):
1. Assistant professor(Sr.Gr),
Department of management studies,
Velalar College of Engineering and Technology,
Thindal, Erode -638 012.
2. Associate professor,
School of management studies,
Kongu Engineering College,
Perundurai, Erode- 638 052.
Phone: 1. 9976661085
2. 9842552729
Fax numbers:
-
Email address(es):
1. muthukrishnaveni@gmail.com
2. muruganandam@kongu.ac.in
Subject to be publish under: Management
Key words for the paper: service quality, passenger car industry, service providers, consumers,
perceptual problem.
DECLARATION: The Manuscript has not been published or Submitted for publication
elsewhere.
INDIAN PASSENGER CAR INDUSTRY AND ITS SERVICE QUALITY
1. D.Muthukrishnaveni,
Assistant professor (Sr.Gr),
Department of management studies,
Velalar College of Engineering and Technology,
Thindal, Erode -638 012.
2. Dr.D.Muruganandam
Associate professor,
School of management studies,
Kongu Engineering College,
Perundurai, Erode- 638 052.
ABSTRACT
This study deals with the measurement of service quality of passenger car industry in India; it
investigates the discrepancy between customers' expectations and perceptions towards the
quality of services. The study was conducted using the SERVQUAL instrument. The results
indicate that the sample population has perceptual problems with their companies providing
services.
Key words: service quality, passenger car industry, service providers, consumers, perceptual
problem
INTRODUCTION
The Indian passenger car industry is zooming ahead with the price and fuel efficiency.
Customers are driving the small and compact car segment. After a two-year cyclical slowdown,
passenger car sales have started to accelerate. In the year 2003, India became the largest
producer of small cars after Japan. It crossed the one million mark in FY 2004-2005. It is party
time for Indian carmakers, specially the small and compact ear manufacturers, who achieved a
growth rate of 20% in car sales in the domestic market and exports. Car sales in India is
increasing at steady speed, in February 2009, monthly sales of passenger cars in India excelled
100000 units, which has crossed more 125000 unit sales in February 2010,With customers
increasingly opting for quality, performance and features besides the price, the compact car
segment has overtaken the small car segment. The small and compact cars together occupy
around 80% of the Indian car industry, leaving the mid-segment and luxury care in terms of sales
and volumes behind. The primary factor driving the car industry is THE RISING household
income. This is fueled by the growth in the service sector. In economic terms, there is a strong
correlation between car sales and GDP growth. With lucrative jobs being available to young
people today, there is an increase in the disposable income, having more disposable income on
hand, the aspiration of Indians to own a car is highest among the developing countries.
Increasing urbanization and proportion of young people in the population coupled with
improving consumer finance facilities with the entry of banks into car finance has come as a
boon to the Indian car industry. Home car manufacturers too have started offering consumer
finance facilities. These facilities are propelled by the reducing interest ratty in the economy.
Reduction in the excise duties on cars has helped reduce their prices. At present, many models
are available with the Indian car manufacturers at competitive prices and manufacturers are
reducing the prices in the mid and compact segments to increase the sales volumes. Presently,
there are 13 car manufacturers in the Indian Passenger car industry, most of them are MNCs,
who entered India after the Indian economy opened up, Maruti is one of the few Indian
manufacturers on the scene. Maruti occupies 50% of the market share in the mini and compact
cars and is maintaining its share despite the stiff competition from manufacturers like Hyundai
and Tata Motors, occupies over 20% of the market share in the small and compact car segment.
The Indian car industry is dominated by Korean and Japanese automakers. Western carmakers
such as Ford and GM have not been as successful as their Asian counterparts like Hyundai and
Suzuki in the Indian market. After understanding the Indian market and its consumers, GM
entered in the small car market BMW and Volkswagen are scouting for locations in India to
setup manufacturing facilities. The Indian car industry is still in the growth and evolution stage
and is depending on the domestic and regional market. But management of after sales services
and consumer satisfaction is also become important issue in passenger car segment. Because
service quality has received extensive attention in the of many researcher in the literature, mostly
studies being carried out in a wide variety of industries such as the hospitals(Medical),
hospitality industry and tourism (Babakus and Mangold, 1992; Soliman, 1992, Saleh and Ryan,
1992; fick and Ritchie, 1991), where quality service is highly required. The purpose of this study
is to understand the consumer's expectations, and its role in improving service quality.
Service Quality Model
The process of managing for improved quality begins with understanding the customer's
expectations. Service quality is the difference between what a customer expects and what is
provided. The expectations/ perceptions conceptualization has been extended to incorporate
"desires" in evaluating customer's perception of service quality. In all the academic sources that
were consulted on service quality, the SERVQUAL model was mentioned as the fundamental
most appropriate method and instrument available to measure quality. There are several
conceptual models that can he used to address the unique challenge, of service marketing. Two
of these are the Services Marketing Triangle and the gap model of. service quality or
SERVQUAL. Therefore, SERVQUAL was chosen based on the review of literature (Hussey and
Hussey, 1997).
Research Questions
This study proposes to investigate the relationship between the perceived and expected service
quality among passenger car users.
Research Methodology
Tills descriptive study utilized a cross-sectional survey design to investigate service quality
perceptions and their competitive analysis in the Indian passenger car industry. The SERVQUAL
model proposed by Zeithaml et al. (1 990} was used as the basis for a structured questionnaire.
Questionnaires were distributed utilizing a convenience sampling to walk-in customers from
Show rooms and service centers (fully computerized and offering whole bouquet of services) for
each of the four car manufacturing companies Maruti-Suzuki, Tata motors, Hyundai and Skoda.
The study was conducted in 10 districts of Tamilnadu state. The questionnaire was administered
to 500 customers. The constraint of this study limited it to one interview per respondent at a
specific point in time. It would be of value to conduct a series of interviews over a period of
time. The study is limited to the car industry in India. The study is also limited to the
measurement of customer service quality at specific show rooms and service stations.
Results and Data Analysis
As Table I shows, the Indian passenger car industry received strong ratings on the tangibles
dimensions, particularly the employee's neat and professional appearance and low ratings on the
empathy dimension, particularly service providers' interest differences. The tangible dimension
has been shown to be an aspect of service quality that is extremely important to customers. This
study used a seven point scale range from "strongly agree" (7) to "strongly disagree" (1) to assess
all five dimensions of service. This study considers the maximum score of customer perceptions
service quality as a basis for competitive assessment.
Table I suggests that Maruti-Suzuki is the highest performing company. This comparison among
companies offers several competitive insights. Maruti-Suzuki holds and advantage over others in
the area of perceived tangible, reliability, responsiveness, and empathy dimensions. Tata Motors
holds an advantage over others in the area of assurance. For the research question, comparing the
results between customers' expectations and perceptions on service quality has interesting
findings, especially the difference among the 21 statements ANOVA was used to determine if
significant differences existed among the service quality dimensions. In general, there were
highly significant differences.
Table I : Competitive Service Quality Assessment (P Scores)
Service Quality Item
Skoda
Tata
Hyundai
Motors
MarutiSUZUKI
Tangible
4.856
5.185
5.190
5.394
Up-to-date equipment
5.023
5.236
5.336
5.338
Visually appealing facilities
4.970
5.057
5.292
5.431
appearance
5.061
5.732
5.628
5.681
Materials visually appealing
4.371
4.715
4.504
5.078
Reliability
4.944
5.047
5.129
5.209
Providing services as promised
5.061
5.122
5.177
5.250
Sincere in solving the problem
4.735
4.748
4.850
5.267
Employees have a neat and professional
Performing service right the first time
4.742
5.041
4.973
5.069
Providing Service at the promised time
4.992
5.057
5.186
5.216
Maintaining error-free records
5.189
5.268
5.460
5.241
Responsiveness
4.157
4.157
4.128
4.409
Services will be performed
4.212
4.000
4.000
4.241
Providing prompt service to customers
4.152
4.301
4.186
4.474
Willing to help customers
4.083
4.146
4.319
4.466
request
4.182
4.179
4.009
4.457
Assurance
4.693
5.128
5.119
5.080
Employees instill confidence in customers
4.636
5024
4.903
4.879
with employees
4.636
4.854
4.920
4.983
Employees are consistently courteous
4.909
5.577
5.540
5.466
Customers' questions
4.591
5.057
5.115
4.991
Empathy
4.138
4.089
4.069
4.393
4.121
4.049
3.912
4.336
4.023
4.033
3.912
4.310
Keeping customers informed about when
Always ready to respond to customers'
Customers feel comfortable interacting
Employees have the knowledge to answer
Employees give customers individual
attention
Employees have the customers' best
interest at heart
Employees understand the needs of the
customers
4.295
40.65
4.133
4.328
Business hours convenient to customer
4.053
4.106
4.230
4.500
Total
4.558
4.727
4.727
4.897
Note : Maximum score of each statement
Table II: Comparison of Mean Responses for Expectation Perception and Gap Scores among users
of passenger cars.
Aspects of Quality Services
Results
E
P
Gap
Priority
Scores
Scores
Scores
Tangible
5.547
5.147
-0.4
5
Up-to-date equipment
5.438
5.238
-0.2
19
Visually appealing facilities
5.878
5.178
-0.7
11
Employees have a neat and professional appearance
5.912
5.512
-0.4
17
Materials visually appealing
4.959
4.659
-0.3
18
Reliability
5.877
5.077
-0.8
1
Providing services as promised
5.849
5.149
-0.7
11
Sincere in solving the problem
5.893
4.893
-1.0
1
Performing service right the first time
5.750
4.950
-0.8
10
Providing Service at the promised time
5.907
5.107
-0.8
7
Maintaining error-free records
6.185
5.285
-0.9
3
Responsiveness
4.911
4.211
-0.7
3
Services will be performed
5.016
4.116
-0.9
5
Providing prompt service to customers
4.875
4.275
-0.6
14
Willing to help customers
4.946
4.246
-0.7
12
Always ready to respond to customers' request
5.007
4.207
-0.8
9
Assurance
5.696
4.996
-0.7
4
Employees instill confidence in customers
5.655
4.855
-0.8
8
employees
5.641
4.841
-0.8
6
Employees are consistently courteous
6.06
5.360
-0.7
13
Customers' questions
5.528
4.928
-0.6
15
Empathy
4.949
4.149
-0.8
2
Employees give customers individual attention
5.005
4.105
-0.9
4
Employees have the customers' best interest at heart
4.868
4.068
-0.8
8
Employees understand the needs of the customers
4.607
4.207
-0.4
16
Business hours convenient to customer
5.115
4.215
-0.9
2
Keeping customers informed about when
Customers feel comfortable interacting with
Employees have the knowledge to answer
Note: E=Expectation, P=Perceptions. Priority is obtained based on the discrepancy between expectations
and perceptions. The bigger the gap score, the more serious the service quality Shortfall from the
consumer viewpoint.
Table III : F Values for Mean Responses for the Five SERVQUAL Dimensions
Priority
Aspects of
P
E
F Value
Quality Services
5
Tangibles
5.8
6.2
3.95
1
Reliability
5.6
6.5
10.05
3
Responsiveness
5.4
6.2
18.10
4
Assurance
5.3
6.0
88.46
2
Empathy
5.3
6.1
25.19
Note: Significance level at p < 0.05.
Table IV : Differences in Means between Perception and Expectation Levels of Service
Quality
Aspects of
P
E
t-stat
P Value
Tangibles
5.8
6.2
-3.50
0.020; 0.039
Reliability
5.6
6.5
-18.74
0.000; 0.000
Responsiveness
5.4
6.2
-14.58
0.000; 0.001
Assurance
5.3
6.0
-13.41
0.000; 0.001
Empathy
5.3
6.1
-7.622
0.001; 0.002
Quality Services
Note: Significance level at p < 0.05.
Among the dimensions (Table III). Based on the results from Table II, the expectation level of
quality service differed from their perception levels. Responses were computed by subtracting
the expectation response from the perception response. A positive score would be recorded if the
result or performance exceeded customer expectations. A positive score indicated an area of
strength and a competitive advantage for the service provider. All 21 statements indicated that
the quality of service fell short of the customers' expectations; customers were generally not
satisfied with the service providers. Nevertheless, each aspect of the quality of service showed
differences with respect to the size of gap score. The list of aspects of quality service could be
ranked from the biggest score to the smallest score.
Table III shows the mean gap scores by dimension for the total consumer sample. These
unweighted gap scores among the five service quality dimensions indicated that the services
provided by the four providers fell short of the customers' expectations on each dimension.
Considering the unweighted gap score in Table II, the dimensions could be ranked according to
the size of the gap. The bigger the gap is, the more important the dimensions from the customers'
point of view, which could be ranked in the following, order: Reliability, empathy,
responsiveness, assurance, and tangibles (Parasuraman et al., 1988). A simple t-test was
conducted to determine whether there is a significant relationship between perception and
expectation level of service quality. Title results art- given in Table IV Analysis of differences
provided evidence that mean differences occurred between perceptions and expectations and
perceptions among the consumers of banking services in India. Consumers' perception of service
quality did not meet with their expectations. As given in Table II none of the service quality
dimensions had a positive SERVQUAL" score, suggesting that the companies considered for this
study did not meet or exceed consumer's expectations
CONCLUSION AND RECOMMENDATION
Findings from this study provide initial direction in determining the optimum service quality
attributes to focus on in promoting services. What becomes clear from the analysis of the gap
scores and rank ordering of dimensions is that there is a perceptual problem, for example, the
respondents were not able to distinguish between expectation and perceived service level
measures of the sample involved. No positive scores were found. The largest discrepancies were
found along the "reliability" dimension. This is alarming since it was identified as the most
important dimension in their overall perceptions (see Table-III). This indicates that the sample
population appears not to be getting what they expect from their companies. However, service
managers often need to consider the varying impact that both process and technical factors of a
service have on perceived service quality. Since 1991, Lytle and Mokwa (1992) and Zenithal et
al. (1993) all argue for the investigation of more comprehensive structures of customer
satisfaction and quality and suggest that outcomes do have an effect on customer perceptions of
quality and satisfaction. If the industry persists in measuring and monitoring the perceptual
aspects of service quality, the complementary aspects of basic outcome must be tracked as well
to ensure an appropriate and satisfactory customer experience.
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