Influences of Income on Luxury Products Consumption

Abstract

This report is aimed to investigate the influences of incomes on consumers consumption and demands of luxury vehicles in China. This study uses the summary of the sales performance of these four brands in China in each year to represent the sales performances of luxury vehicles in China. This report uses the units sold to represent the sales performances. This study uses the national data from the Chinese National Bureau of Statistics to collect the average disposable income data to represent the income conditions of Chinese consumers Based on secondary data collected about the sales performances of luxury vehicles and disposable income conditions of Chinese consumers, this study found that incomes have huge influences on consumers demands of luxury vehicles. Just as expected by theory, the income elasticity of demand for luxury vehicles is larger than 1. In China, as the increasing incomes of consumers, the demands of luxury vehicles are also increased and the percentages of increase in demands are larger than the percentages of increase in incomes. Moreover, this study found that the negative expectation of consumers to future incomes also seriously influence the demand of luxury vehicles.