Car Buying Research Articles

Options for auto manufacturers in dealing with fuel supply shortfalls

Auto users' initial responses to an energy emergency will include the elimination of discretionary trips, linking of essential trips, increased ride-sharing, and greater attention to matching vehicle characteristics to trip purpose. These immediate behavioral changes will be followed by changes in both new and used car buying preferences, reflecting renewed interest in fuel economy and range. Strategies that are being (or might be) employed by the auto manufacturers to anticipate these sudden changes in their customers' preferences include implementation of flexible production technology, use of marketing techniques that recognize small market segments, e.g., for micro-mini automobiles, introduction of new, flexible methods of vehicle availability including leasing and home-based pools, development of vehicles that use methanol and other non-petroleum fuels and more extensive use of advanced engine and drive train technology that provides improved fuel economy without sacrificing size and weight. The government can contribute to successful implementation of these strategies by further relaxation of energy price regulation and implementation of other policies to promote or permit development of both petroleum and synfuel supplies. Attempts at arbitrary allocation of supply or regulation of efficiency would be counterproductive.

A Note on Car Replacement

Most studies of the demand for cars are designed to explain new purchases and assume that purchases are divided into net investment and replacement. Replacement is invariably identified with stock depletion, defined either as scrapping (determined by the length of life of a car) or as depreciation (determined by the decline in the price of a used car with age). Implicit in these theories is the assumption that the elasticity of substitution between the new and used car markets is rather high. This assumption is necessary to ensure that the price mechanism will induce consumers to buy new cars to make good the stock depleted by the scrapping or depreciation of used cars. Most empirical evidence indicates that this assumption is not justified and that new and used cars are poor substitutes, e.g. [1], [8] and [6]. Since the low degree of substitution between the two markets insulates new car purchases from the factors that influence the stock of used cars, stock depletion cannot explain replacement purchases of new cars. In this note an alternative approach will be suggested and its use illustrated by the case of new car sales in the US. The advantages of this approach are: (1) replacement is directly observable; (2) the assumption of perfect substitution between new and used car services is not necessary; and (3) it may help account for a series of implausible estimates of the depreciation rate that have been obtained from more orthodox models. It is generally accepted in the US automobile industry that new and used cars are bought by distinct groups. For instance, White in a recent study of the industry [6] says: New cars are not bought by a random selection of car owners but, instead, tend to be bought by a small group who buy new cars comparatively frequently and sell their used cars to the general public to hold. As an approximation, therefore, we can split buyers into two groups, those who buy their car new and those who buy it used, treating these groups as distinct. The demand of the new car buying group is primarily for replacement, since between 80 and 90 per cent of them trade-in or sell an old car when buying a new one; the average time from purchase to resale is between two and three years. This leads us to a definition of replacement as the process by which a consumer disposes of a car bought i years ago and purchases a new one. The existence of a well-developed second-hand market confirms that the replacement interval, i, is considerably shorter than the lifetime of a car, so that replacement does not equal scrapping. This replacement interval will vary between household and we shall observe a distribution of intervals, say c(i), which will determine the lag distribution generating replacement, U, from past purchases, Q; i.e.

CAR BUYING BLUES

Medical Journal of AustraliaVolume 1, Issue 1 p. 27-27 Comments and Abstract CAR BUYING BLUES First published: 01 January 1969 https://doi.org/10.5694/j.1326-5377.1969.tb49661.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume1, Issue1January 1969Pages 27-27 RelatedInformation

Self-Confidence and Persuasion in Car Buying

Intensive interviews with 234 new car buyers reveal that those with general self-confidence tend to have high specific self-confidence in their car buying ability. These two factors combine to influence consumer use of friends as purchase helpers. Consumers and their purchase helpers form a buying team whose specific self-confidence is curvilinearly related to persuasibility.

Self-Confidence and Persuasion in Car Buying

Intensive interviews with 234 new car buyers reveal that those with general self-confidence tend to have high specific self-confidence in their car buying ability. These two factors combine to infl...