Can subsidy programs change the customer base of next-generation vehicles?

Although many countries have implemented subsidy programs for next-generation vehicles in order to reduce energy consumption and greenhouse gas emissions from the transportation sector, the effect of such programs has not yet been fully investigated in terms of their influence of households f vehicle selection. The Japanese government introduced a subsidy program entitled gEco-car h during 2009 and 2012. In this study, we apply multinomial logit models to micro-level data of vehicle selection from the National Survey of Family Income and Expenditure in order to identify the types of households who switched from conventional gasoline vehicles to hybrid electric vehicles (HEVs) using this subsidy program. Our analyses demonstrate that higher income households who used compact gasoline vehicles (CGVs) before the Eco-car program switched to HEVs using the subsidy, whereas those who used regular gasoline vehicles (RGVs) did not switched to HEVs. Although seniors chose HEVs over CGVs before the Eco-car program, younger consumers began choosing HEVs over CGVs after the Eco-car program. We also find that gasoline price became a less important factor on HEV purchase after the Eco-car program.