Trend Analysis of People opting for Bank Car Lease Schemes

Nadia Zehra
Department of Computer Sciences,
Allama Iqbal Open University, Islamabad
Abstract:
Banks provide car leasing schemes to
customers who can pay in installments. In
order to meet the expectations: customer
inclination is to be researched. So that banks
can endow more profitable design and focus
on the automobiles that can provide more
benefits in the future. Customer data can be a
useful contribution to estimate the economic
trends. Nowadays banks give a lot of facilities
to customers from credit cards, different kinds
of loans, insurance and auto lease schemes.
Our focus in this research is on information
drawing out of car leasing scenarios. Now
owning a car is not a huge burden as it used to
be few years back. People can get brand new
luxurious or second hand cars of their choice
at affordable prices on regular installments in
lieu of various car leasing schemes. Such an
ease has increased a lot of traffic as
individuals with average income keep a quota
of their money for loans to be on roads. In this
study our focus is to find trends in car leasing
among common people, their perceptions and
how to improve the road behavior.
Introduction:
The car lease cases have interest rates or are
mortgage free, depending on the type of
banking. The repayments have to be made for
a range of 1-5 years in many cases. This data
can very helpful if we want to make educated
guesses about customer preferences of buying
the type of cars. Similarly keeping in view the

background of customers, it can be somehow

ruled out that how customers manage the
paybacks. Transport situation in Pakistan is
not better than worse. According to World
Bank Report there are approx 10 passenger
transports for 1000 people in Pakistan in
2009. This is disquieting situation on roads.
An alarming situation for a population of 180
million. Out of which working class make 110
million which is 60% of the population [1].
According to Neilson Study in 2014, about
78% of people want to buy new cars in next
two years and 89% are willing to get them
when they become financially strong. To meet
the demands of working people on roads Car
Financing has played a vital role in providing
auto lease opportunities. The banks that
provide car financing in Pakistan are: HBL,
Askari Bank, Meezan, NIB, Dubai Islamic
Bank to name the top most ones.
Customers play a key role in financial sectors
specially banks. The needs and behavior of
the customers can be analyzed using CRM
techniques [2]. One aspect of CRM is to
highlight the customers that can be termed as
cash effective and on the reverse all those as
well who are risk to banks. Therefore
Customer analysis done by banks can not only
increase performance but also strengthen the
customer ties with it. Banks that apply
analytics to customer data have a four
percentage point lead in market share over
banks
that
do
not.[3].
Financial
characteristics of the borrowers are an

important substantial body to know their

status to draw to a close look at their payback
trends. Prudent borrowers restrict their loan
demands to a reasonable percentage of their
annual income, and many banks as a matter of
practice enforce an arbitrary maximum
percentage. [4].
Problem Statement:
The research focuses on trends analysis of
customers availing car lease schemes. The
evaluation is to support the banks analyze
how to categorize the loans. A particular
brand of car could be a hot favorite. Which
banks policies are mostly favored by people?
Are the policies by banks beneficial and
analyze the improvement suggestions given
by the people.
Research Methodology:
Analysts say that as technology becomes
increasingly important, some buyers have
started to assess their cars and trucks as they
would the latest computer or cell phone as a
gadget. The lease has offered a solution for
many shoppers: a chance to drive home in a
vehicle that has the latest technology, while
still keeping that monthly payment within
reach [5]. The methodology that is used to
analyze customer trends is through surveying.
A general quantitative analysis is done taking
in account ordinary people. A sample size of
25 is used with people of no prior knowledge
of car leasing methodology.
Data Analysis:
In this research we seek different views of
general public for e.g. Are the installment
limits harsh or not? The following results
show that more than half of the people didnt

reply in favor of Installment limits. If you do

an Industry analysis the Installment rates of
various banks vary from 18-21% of overall
payment which amounts a lot for an average
income customer.
Opinion about Installment Rates of Car Leasing Schemes
40
30
20
10
0

In another question of preference of Banks

most of the customers voted for two Banks
namely Bank Alfalah and Askari bank Ltd.
Due to Good Customer Satisfaction repute
they are termed as the most favorite banks.
Banks offer different cars of customer choice
to be leases. Due to different markup rates
and installment types people preferences
change. Most of the people tend to buy small
cars which are more affordable. The analysis
has shown that most of the customers tend to
prefer Suzuki and Honda Brand. The cars
which bought at once with full payment are
now possible to be drawn with some down
payments. One becomes owner without
paying the actual amount. This ownership
gives customer the freedom to choose their
dream car. Local car sales (including light
commercial vehicles, jeeps and vans) jumped
to 54,812 units in the first three months (JulSep) of fiscal year 2016, up 72% compared to
31,899 units in the same period of last year,
according to data released by the Pakistan

Automotive
(PAMA). [6]

Manufacturers

Association

Another feature of our survey has been the

market segmentation. There are many broad
aspects of Market Segmentation in
Automobile Industry that range from
Geographical, Demographical, Psychological
and Behavioral Segmentation [7]. People
preferred that young employees and people
who are financially robust must opt for these
schemes. This gives the idea that as Pakistan
is a young country with 63% population under
the age of 25. So its very feasible to target
the consumer group of young enthusiast
employees to employ in these schemes.
Usually low cadre employees with new jobs
tend to have cars for their status
improvement.
Transport Issues as mentioned earlier is a
grave concern. There is already much traffic
on roads. And Car Financing has added more
burdens on roads, as in Pakistan public
transport has not provided the adequate means
to travel within city. The recent incorporation
of Metro Services in big cities like
Rawalpindi/Islamabad and Lahore has
provided a positive impact on ordinary people
commuting within cities. It is estimated that
public transport demand of around 153,000
passengers is available on daily basis between
the two cities (Islamabad-Rawalpindi) [8].
However within the city there is still not a
passable infrastructure to maintain people
commutation. Though Car financing has
provided relief to individuals, it has
supplemented traffic problem to a huge
extent. Such issues can be addressed if the
Leasing Companies focus on Green
Environment. They should do measures to

provide vehicles that are less polluting, and

limit the families with already possessing
vehicles to exclude from such schemes. Most
of the customers have given positive reply for
Green Leasing in the survey. And much do
not know the terminology. With propagation
towards such important factor, things can go
in favor of clean environment businesses.
Conclusion:
In Banks there is a much greater scope to do
market segmentation for auto leasing. There
are many areas that need to address like Safe
Auto Banking, Green Auto Leasing and Soft
Installment rates to make cars affordable for
ordinary users. Customer analysis and trends
study give a projection towards future policy
making and course of actions. Car financing
is a success tree if it is grown with proper
research methodologies incorporating future
trends as well.
References:
1. Mazhar, N. (2013). Pakistan Economic
Survey 2012-13: Population, Labour
Force and Employment, Ministry of
Finance, Government of Pakistan.
2. Suresh, B. C. (2012). CRM is all
about bringing people, processes &
technology together a case study of
banking sector in India, Romanian
Journal of Marketing, 1, 50-56.
3. Consulting, C. (2013). Big Data
Alchemy: How can Banks maximize
the value of their customer data, Retail
Banking Voice of the Customer
Survey, Capgemini & EFMA.
4. Chapman, J. M. (1940). The
Customers
of
Personal
Loan

Departments, Commercial Banks and

Consumer Installment Credit, NBER.
5. Kessler, A. J. (2015). Auto Leasing
Gains Popularity Among American
Consumers, The New York Times
(Jan, 8).
6. Ibex (2015). Car Sales Jumped to 54,
812 units in the first three months FY
2016,
Accessed
from:
http://www.ibexmag.com/pakistan/ne

ws/car-sales-jumped-to-54812-unitsin-the-first-three-months-fy-2016/
7. Mantra,
G.
(2011).
Market
segmentation
for
automobiles,
Accessed
from:
http://gauravmantra.blogspot.com/2011/03/marketsegmentation-for-automobiles.html
8. Metro, Rawalpindi (2016). Accessed
from:
http://www.metrori.pk/aboutproject/