SUMMARY
Perceived risk is an ambiguity that consumers face when they cannot foresee the outcome of their purchase decisions. Perceived risk occurs when an individual consumer perceives the possible hazard or chance of loss as the result of a purchase decision. Consumers are influenced by risks that they perceive whether or not such risks actually exist. The objective of the paper is to identify the dimensions of perceived risk and to develop a scale for measurement of perceived risk in purchase of car The study involved 150 respondents and was conducted over a forty five day period in January 2014 in Cuddalore district of Tamil Nadu. Five brands of cars namely Maruti, Hyundai, Tata, Toyota, Honda and Ford alone was considered for the study. Exploratory factor analysis with a varimax rotation was conducted on the total 64 questions, which were later reduced to nine dimensions. The nine dimensions of perceived risk identified for the study included physical risk, psychological risk, functional risk, social risk, financial risk, time risk, decision risk, obsolescence risk, and facility risk. When the nine factors were allowed to correlate, the fit statistics suggested a good model fit. The developed scale will be useful to car companies to make a check on the important components that sums up the perceived risk for that customer. In future scales can be developed to identify the perceived risk for luxury car market segment as well as for sports utility vehicle market as also involving brands that was not considered for the study.