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Non-price determinants of automotive demand: Restyling matters most

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  • Korenok, Oleg
  • Hoffer, George E.
  • Millner, Edward L.

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 10% 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.

Suggested Citation

  • Korenok, Oleg & Hoffer, George E. & Millner, Edward L., 2010. "Non-price determinants of automotive demand: Restyling matters most," Journal of Business Research, Elsevier, vol. 63(12), pages 1282-1289, December.
    • Handle: RePEc:eee:jbrese:v:63:y:2010:i:12:p:1282-1289
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    3. Alex Burnap & John Hauser, 2018. "Predicting "Design Gaps" in the Market: Deep Consumer Choice Models under Probabilistic Design Constraints," Papers 1812.11067, arXiv.org.
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    7. González, Eduardo & Cárcaba, Ana & Ventura, Juan, 2015. "How car dealers adjust prices to reach the product efficiency frontier in the Spanish automobile market," Omega, Elsevier, vol. 51(C), pages 38-48.

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    More about this item

    Keywords

    Automobile pricing Warranty Safety appliances Rebranding Reliability;

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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