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Non-Price Determinants of Automotive Demand: Restyling Matters Most

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Author Info

  • Oleg Korenok

    ()
    (Department of Economics, VCU School of Business)

  • George E. Hoffer

    ()
    (Department of Economics, VCU School of Business)

  • Edward L. Millner

    ()
    (Department of Economics, VCU School of Business)

Abstract

This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a ten percent reduction in relative price would yield only one-tenth the market share impact of a restyling. Alternatively, one would have to double one’s relative advertising expenditures to match the impact of a restyling. Several demand determinants not previously modeled, including rebranding and warranty curtailments, were detrimental to domestic manufacturer market shares. Safety appliance adoptions and changes in vehicle reliability had minimal impact on demand.

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Bibliographic Info

Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number 0903.

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Length: 24 pages
Date of creation: Sep 2009
Date of revision:
Publication status: Forthcoming in Journal of Business Research
Handle: RePEc:vcu:wpaper:0903

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Keywords: automobile pricing; warranty; safety appliances; rebranding; reliability;

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  11. Chang, Dae Ryun & Cho, Hang, 2008. "Organizational memory influences new product success," Journal of Business Research, Elsevier, vol. 61(1), pages 13-23, January.
  12. Boulding, William & Purohit, Devavrat, 1996. " The Price of Safety," Journal of Consumer Research, University of Chicago Press, vol. 23(1), pages 12-25, June.
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