Influence of consumer decision factors on revenue growth of used vehicle enterprises in Nairobi County
Thuo, James Mbugua
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The used car market is a significant part of the motor vehicle industry as it contributes 8% to the Gross domestic products and creates employment to approximately 59 % of the micro, small, and medium enterprises labour force in Kenya. The sector saw a positive trend in growth for the past two decades but has seen a significant reduction in growth in the last 5 years. This study sought to explore the influence of consumer decision making factors on revenue growth of used motor vehicle enterprises in Nairobi County. The study was guided by three specific objectives: (i) to determine the influence of economic factors on revenue growth of used motor vehicle enterprises in Nairobi County; (ii) to determine the influence of psychosocial factors on revenue growth of used motor vehicle enterprises in Nairobi County; (iii) to determine the influence of functional factors on revenue growth of used motor vehicle enterprises in Nairobi County. The study adopted a descriptive research design. There is no database of used car consumers and thus used car dealership managers were used as provide average numbers for consumers. The target population was 357 consumers of used cars from used car dealerships in Nairobi County from which a sample size of 191 respondents was extracted. A structured questionnaire was used to collect data from the final sample of 125 respondents. The research assistants randomly administered the instrument to consumers and the owners/managers of used car dealerships. The data was analysed using descriptive, correlation, and multiple regression analysis. The findings indicated that economic factors had a positive and significant effect on revenue growth; psychosocial factors had a negative but insignificant effect on revenue growth; and functional factors had a negative and significant effect on revenue growth of used car dealerships. The study thus concludes that buyers of used vehicles are influenced by economic factors such as price and their level of income which contributes to the sales of these enterprises as they provide cars that are in the price ranges of their consumers. The study also concludes that image and status associated with vehicles is not a variable that influenced consumers’ choice for used vehicles; that durability and fuel efficiency of used cars is an important variable for buyers which if provided would lead to increased revenue growth for used businesses in Nairobi County; and that used car enterprises should strive to offer market prices and rates for used vehicles to boost their revenue growth. The study further recommends that used car dealerships to pay more attention towards providing units that are more fuel efficient and durable. The study was limited to Nairobi County and there is a need to conduct a similar study on a national scale. The study was limited to used cars. However, there is a need for future research to consider other categories of cars including brand new cars in the Kenyan market.