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Maximum Entropy Principle underlying the dynamics of automobile sales

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Listed:
  • A. Hernando
  • D. Villuendas
  • M. Sulc
  • R. Hernando
  • R. Seoane
  • A. Plastino

Abstract

We analyze an exhaustive data-set of new-cars monthly sales. The set refers to 10 years of Spanish sales of more than 6500 different car model configurations and a total of 10M sold cars, from January 2007 to January 2017. We find that for those model configurations with a monthly market-share higher than 0.1% the sales become scalable obeying Gibrat's law of proportional growth under logistic dynamics. Remarkably, the distribution of total sales follows the predictions of the Maximum Entropy Principle for systems subject to proportional growth in dynamical equilibrium. We also encounter that the associated dynamics are non-Markovian, i.e., the system has a decaying memory or inertia of about 5 years. Thus, car sales are predictable within a certain time-period. We show that the main characteristics of the dynamics can be described via a construct based upon the Langevin equation. This construct encompasses the fundamental principles that any predictive model on car sales should obey.

Suggested Citation

  • A. Hernando & D. Villuendas & M. Sulc & R. Hernando & R. Seoane & A. Plastino, 2017. "Maximum Entropy Principle underlying the dynamics of automobile sales," Papers 1705.03458, arXiv.org, revised May 2017.
    • Handle: RePEc:arx:papers:1705.03458
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