Degree
Master of Business Administration
Faculty / School
Faculty of Business Administration (FBA)
Advisor
Dr. Mohammad Kamran Mumtaz, Assistant Professor, Department of Management
Committee Member 1
Dr. Kamran Mumtaz, Assistant Professor, Faculty of Business Administration, Institute of Business Administration, Karachi
Project Type
MBA Research Project
Keywords
https://ir.iba.edu.pk/do/search/?q=Business%20venture&start=0&context=8598587&facet=">Business venture, Electric vehicles, Automobile market, Eco-friendly, Foreign investors, Competition, Automotive industry
Abstract / Summary
This report addresses our client’s requirement whether to invest its limited funds in the business venture of import of electric cars in Karachi. A problem statement was derived for the basis of our research and objectives were defined accordingly. Pakistani automobile market is oligopolistic where only three giant companies provide family cars in all categories whether Sedan, SUV or hatch back. During recent years, consumer buying pattern has been tilted towards Japanese reconditioned cars. In fact, hybrid cars import increased by 90% in 2018, costing more than $185m to the national exchequer. Moreover, global trends are changing in automobile sector as consumer’s demand more fuel-efficient cars. Recently, Prime Minister of Pakistan has announced that 30% of total cars (on the road in Pakistan) will be electric vehicles by 2030 in light of the global trends.
The question arises: If electric vehicles are launched in Pakistan, will EVs be able to compete with conventional (gasoline engine) vehicles? The factors we discuss in this report are: price, infrastructure, power shortages, sources to find an eco-friendly way of charging batteries, inconsistent government policies and consumer preferences. To understand the structure of automobile industry and the factors which play an important role in purchase decision of cars, a secondary research was conducted via industry analysis and literature review, which provided us the framework for our research project. Moreover, primary research was conducted via consumer surveys, three interviews and two focus groups to gain an insight into consumer preferences with respect to various factors when intending to purchase cars and assess consumer awareness regarding the pros and cons of electric vehicles. In Pakistan, the lack of road infrastructure coupled & the capital investment required to establish and operate charging points are major problems identified by potential electric vehicle buyers.
The report also covers the potential brands and models which can be imported by our client. In order to gain deeper understanding of the benefits offered by vehicles already in the global markets, we compared Hyundai IONIC electric vehicle with conventional Toyota Corolla Altis 1.6 in terms of MSRP, estimated annual maintenance, range, price and cost per kilometer. The cost per KM was found to be Rs 2.8/km for EV and Rs 7.6/km for conventional car.
Lastly, a regression analysis was conducted on the results of the respondents from our surveys to understand the relationship between dependent and independent variables of our research framework and formulated an equation which is:
Purchase intention = 0.458 Brand Loyalty – 0.013 Brand Product Quality + 0.038 Product + 0.084 After Sales Service + 0.384 Price.
Finally, the findings which we obtained from our primary and secondary research were linked to our client’s objectives and research questions, and recommendations were given based on our finding. We recommend that if KE wants to import an EV for the purpose of reselling in Karachi, it should first wait for any consistent government policy for EV and better infrastructure development. To influence the choice of consumers to buy EVs, KE should consider importing those brands of EV which offer Sedan body type in the price range of PKR 2 to 3 million. Toyota came out to be the most preferred brand of vehicles, which is also evident in the current buying and selling patterns of vehicles in the local market.
Recommended Citation
Sajid, D., Aziz, F. A., Hussain, G., Khan, H., Ather, M., & Yousfani, M. (2019). An empirical study to assess the demand of electric cars in Karachi (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-mba/234
