Assistant Professor Dasgupta is looking into what factors influence the decision to buy or lease a vehicle

 
Assistant Professor Srabana Dasgupta is using her critical thinking skills to examine a number of issues related to vehicle leasing and purchasing in Canada. Working with her colleagues at Sauder School of Business, she has been investigating a wide range of issues associated with the automobile industry. She has examined factors that affect decisions made by consumers in regards to leasing or purchasing a car and also the impact of fixed-pricing on vehicle sales.

“I have just recently completed a research project addressing the question: Why are certain cars more likely to be leased then others?” explains Dr. Dasgupta. “In order to answer this question I worked with a complex dataset compiled by JD Power that contained a record of every dealership-based automobile transaction in Canada. This information included such things as sale price, contract terms, car features, and lease or purchase agreements”.

Once this information was collected, Dr. Dasgupta codified this information to determine if any trends emerged. She discovered that there were a number of factors that impacted purchase behaviour and one of the most interesting findings was contrary to what we might expect.  It was not just price that impacted on leasing versus purchasing decisions, but also factors including maintenance costs and how frequently the car would be driven. Many leases have strict limits on the number of kilometres that may be driven each year and stiff fines are levied on drivers who exceed the limit. So, consumers are forced to make decisions based on many factors, not just price. Being an informed and aware consumer is extremely important when making a car purchase and this study highlights the complexity of this decision making process.

This decision making is also important to automobile manufacturers who decide on pricing levels. Dr. Dasgupta has been working with two other professors to examine the impact of a car company’s decision to switch from a negotiation style of pricing to a fixed price model. For this project they used the Access Toyota Program as an archetype. The program, launched in 2000, introduced a fixed price policy meaning that when a consumer walked into a Toyota dealership the price was non- negotiable.  Effectively, this meant that Toyota cars could be sold at a higher price raising questions in regards to how it would affect its own sales and sales of its biggest competitor, Honda. 

Dr. Dasgupta’s analysis of the data yielded fascinating results. Sales did not drop for either Toyota or Honda and both increased prices for most models and saw profits rise. This result seemed to indicate that some people are willing to pay more for the convenience of not having to bargain and knowing that others were not getting a better deal. Interestingly, the price of Toyota's entry level car, the Corolla (and similarly the Hondo Civic) was not higher, but its sales were. Although the Ontario government did not allow the Toyota Access Program to be implemented in that provice, it continues to be offerred elsewhere in Canada.

Visit Srabana Dasgupta’s profile to learn more about her research.