The Demand Analysis Of The Typical Car Market In China At This Stage

Last 30 years, people's living standard improves largely and disposable income is also increasing. Chinese automobile market has experienced earth-shaking changes. The vehicles gradually become to be families' assets. In order to research the nature of Chinese car market and potential of the law, by constructing appropriate measurement model for quantitative analysis of the car market, but so many Chinese car market kinds. We are unable to get all the data, so I choose 21 typical models as the object of study. These 21 kinds of vehicles have the most representative features, listed as below:(1) All monthly sales data of typical cars can be collected;(2) All price data of the typical models are very detailed, facilitate to construct price indexes;(3) These 21 typical models include all grade level models; listed as the car whose price of lower than 100,000RMB ,between 100,000RMB and 200,000RMB, between 200,000 RMB and 300,000 RMB, upon 300,000 RMB, facilitate research on the different grades of the vehicle market characteristics;(4) The selected models were produced in a typical 14 manufacturers. This would to some extent reduce the sales strategy for the single market manufacturers, which depicts more objective market characteristics;(5) This 21 typical models are replaced by themselves relatively small, For Audi cars because prices are basically above 300,000 RMB and come from FAW_VOLKSWAGEN. So when deal with it, we treat them with the same price level And the sales is the summation of all Audi cars. This will reduce the substitution of the same brand but different models;(6) These typical models accounted for 6% of all models. However, the average sales can reach 23% of total market sales, a highly representative market can be a very good response characteristic; This paper focuses on typical models to analyze the entire market, as well as its' inherent laws, and in order to study sedan market characteristics more carefully, According to these typical vehicles' price, I divided into four grades: price under 100,000 RMB, 100,000 RMB to 200,000 RMB, 200,000 RMB to300,000 RMB and upon 300,000 RMB. Many factors can impact car market, such as buying power, car prices, oil prices, automobile credit, and investment in fixed assets. However, because We can not get all the data which we want, So I chose the buying power and car prices to analyst, there are many indexes to measure the level of purchasing power, The total retail sales of consumer goods, disposable income and purchasing power index are the most common, To match the buying power of the car market, disposable income is the most appropriate measurement. And the price level have no direct referencing data, Therefore, the price level should be constructed as to reflect the car's price index data. In this paper, by dealing with these typical models' weekly price data from January 2004 to December 2006, then can get the market price index data and the price indexes of different grades.To better the analysis, This paper constructed a linear regression model which use the sales as the explained variable and use disposable income and price index as explanatory variable, as follow :S_t=C+αY_t+βP_tC is the Constant, S_t is the sales of t-period. Y_t Is the disposable income oft period (the monthly disposable income of urban), P_t is the price index dataof t period. We can find that the different grades with the different rules through regression analysis:First, the middle classes models, the quality of Chinese auto market, competition is very fierce. There is a surplus of production to a certain extent, these current economic strength of our country, and the disposable income of the population have close relations. In recent years, people's living standards have continued to improve, but comparing with the Western developed nations, China is also a developing country, the disposable income is limited. So the middle and lower ends of cars is still the main force in Chinese car market, And for manufacturers, the middle and lower ends of cars have a relatively low threshold, Therefore, a large number of car manufacturers engaged in low-grade market, the competition is so fierce, Car manufacturers in the middle and lower ends to seize market shares and expand sales, all of them have joined into the price war. Thus lead the price level of the middle and lower ends of the cars to fall further. Even lower then the same car made abroad. Therefore, the price elasticity of demand for the middle and lower ends of cars are lower than zero.Secondly, the senior Chinese car market has just started; the market still has great potential space to be tapped. Senior international business cars have high economic returns, it is an indisputable fact, and the price of a certain car sold in China is more expensive than this car sold in the United States market or the European market. So manufacturing the luxury cars in China have more economic returns than in other countries. Meanwhile, we can be seen from the processed data, Chinese luxury sedan's price don't have a significant downward trend like the cars of the other grades. Instead, fluctuations in the trend shows that insufficient competition in the market, from the results of the regression analysis, we find that there is a positive correlation between the price level and sales. The rise in the price level can not result in the decline in sales. The luxury car market has a significant gap of demand. Therefore, we can get the result that the luxury car market will be a major emulative market in future.Finally, as can be seen from the empirical model, except the cars whose price is lower than 100,000 RMB, the income elasticity of demand is positive, It is said that the level of income makes the sales increased, which is very reasonable. Because the average disposable income level is increased, so that more and more people can afford to buy cars. For the cars whose price is lower than 100, 000 RMB, the income elasticity of demand is lower than zero. This is because of the fierce competition of the market, consumers are choosing low-grade cars often have more choices. So for the low-grade cars in the market, the income elasticity of demand is lower than zero.