National car and customer loyalty: the Malaysian perspective

The ASEAN Free Trade Agreement has facilitated the entrance of foreign cars into Malaysia’s passenger car market and consequently imported cars are posing a serious threat to domestic automotive companies. This can be seen by decreasing sales figures and the deteriorating market share for the Proton and Perodua (companies partly-owned by government). Driven by this situation, this study examines customer satisfaction and loyalty for the consumers who have purchased these cars. Although consumer behaviour literature has highlighted consumer ethnocentrism as the main motivation for customers to buy domestic products, this study explores other factors beyond ethnocentrism. A quantitative approach with a survey method was used in this study. The survey was conducted at selected car service centres. Hierarchical regression, SEM and moderation constituted statistical analyses employed to study various relationships among the various constructs in this study. Within the context of the Malaysian automotive industry, the findings show that the purchasing of domestic cars is complex. This study found that many factors involve in purchasing decision which include branding, self-congruity, car characteristics and service quality along with consumer ethnocentrism. In contrast with the literature suggesting that consumers buy domestic product because of ethnocentrism, nationalism and patriotism, this study found otherwise. The findings also challenge the existing branding literature which suggests that a strong brand can be nurtured and developed through a careful business strategy. The results show automotive award (non-corporate communication) as the source of trust which help the consumer to define the brand. This study also contributes in explaining service quality concept from Asian perspective. The results indicate that theoretically, Asian consumers have different definition of service quality opposing to the West. Another significant contribution from this study is switching should be considered in the context of studying customer loyalty. In reflection to the results, implications concerning both research and managerial practices are offered