UC Berkeley

Aided by economic development, India is undergoing rapid motorization. Growth of car ownership and use is attributed to rising per capita income and introduction of many car models are promoting the growth of ownership and use of cars. This growth portends a sea change in a country that relies mostly on non-motorized and public modes of transportation. It also signifies the transformation to a car based lifestyle in a country where motorized two-wheelers are the dominant personal motorized vehicle.

Such a transformation calls for various policy pertaining to auto-ownership that aim to i) reduce fuel emissions, ii) enable environmental protection, and iii) support infrastructure development. This research aims to support such policy development by providing information on the substitutions among various categories of motorized vehicles owned by households. To this end, a primary survey was conducted in Surat, a prosperous, industrial city in western India in 2009. The survey involved home interviews of 196 motorized vehicle owning households.

The research explains the effects of increased per capita income and of the decreasing sizes of households on the composition of motorized vehicle fleet. The analysis involves econometric modeling supplemented with qualitative observations based on interviews and interactions with the residents. The research focuses on the possible shift from motorized two-wheelers to cars, and the substitutions among different sizes of cars. It reveals that household income is the key determinant of the number and the sizes of cars that households own, and that household size is a much less significant factor; smaller vehicles are preferred even by larger households. Some of the possible reasons for this preference are the relative expense of larger vehicles, lax enforcement of regulations allowing many more passengers than mandated by the seating capacity, and the need for maneuverability for driving in congestion and for parking.

An integrated choice and latent variable model is used to study the effect of different attitudes on the type of vehicles purchased, such as new versus pre-owned motorized two-wheelers or different sizes of cars. The results reveal that underlying perceptions and cultural beliefs regarding the different modes of transportation, attitudes on saving or spending money and similar subjective factors are not significant in explaining the type choice behavior of the households surveyed. Instead, the measurable vehicle attributes, such as price and cost of fuel, and those of household characteristics, such as household size, are what explains purchase behavior of these households.

The contribution of this research is in analyzing the choice of car size categories in a developing country. In a single framework, it studies the substitutions among i) motorized two-wheelers and different sizes of cars, and ii) between new and used vehicles.