Measuring the effect of customer satisfaction on customer re-purchase intention in the second-hand motor industry

Abstract

The study investigates the effect of customer satisfaction on repurchase intention in the second-hand motor industry of selected provinces in South Africa. This industry is very competitive, price sensitive and high service levels are expected. Service quality, price competitiveness and the variety of products can have a significant impact on the competitiveness of a second-hand motor dealership. As a result, a study with the primary objective to determine the current customer satisfaction levels of a second-hand motor dealer was needed. The literature study compiled an industry profile of the second-hand motor industry and then analysed customer satisfaction and repurchase intention in South-Africa in one company with various dealerships. The literature also focused on the determinants of customer satisfaction and the relationship between customer satisfaction and repurchase intention. Data was collected from customers of one of the largest second-hand car dealers in South Africa (We Buy Cars) using an electronic form to record customer satisfaction on a 5-point Likert scale. A total of 6,883 questionnaires were emailed to customers of which 511 were completed and returned (signifying a 7.4% response rate). Exploratory factor analysis identified seven underlying customer satisfaction variables, namely Customer satisfaction, Marketing channels, Intention to purchase, Service options, Consumer behaviour, Overall experience and Media platforms. These factors explained a favourable cumulative variance of 64%. All the factors except Factor 3, yielded satisfactory Cronbach alpha coefficients larger than 0.775, and are therefore deemed reliable. Conclusions and recommendations were made to increase customer satisfaction in the relevant dealership. Based on the results of the data analysis, it is recommended that all the results and findings get distributed to the relevant departments in this dealership. Lastly it is also highly recommended that internal actions and controls get developed to keep on improving the customer satisfaction levels.