An Econometric Analysis of the Determinants of Passenger Vehicle Sales in Germany

FCN Working Paper No. 06/2018

34 Pages Posted: 6 Sep 2018 Last revised: 14 Nov 2018

See all articles by Yu Zeng

Yu Zeng

RWTH Aachen University

Hendrik Schmitz

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Reinhard Madlener

RWTH Aachen University

Date Written: April 1, 2018

Abstract

The automobile market is one of the most significant sectors of the German economy both in terms of value added and number of employees. This paper focuses on the determinants of automobile demand in Germany from 2008 to 2016. We apply multiple linear regression in order to estimate new passenger vehicle sales, using monthly data on price, product parameters, quality ratings, macroeconomic variables as well as government incentives as explanatory variables. For each car segment, a separate model is built, with the purpose of uncovering similarities and differences between distinct segments. Our results indicate that quality is significant for all groups, while consumers’ attitudes towards vehicle prices vary from segment to segment. Purchasers of large-sized cars are sensitive to the fuel efficiency of vehicles, whereas drivers of small-sized vehicles pay less attention to fuel consumption. Most of the consumers in Germany are not considering vehicle emissions in their purchasing behavior. The results of this study can help automobile manufacturers to make strategic decisions and help policymakers to understand the automobile market better.

Keywords: Automobile Demand, Multiple Linear Regression, Germany

JEL Classification: C33, D12, L62

Suggested Citation

Zeng, Yu and Schmitz, Hendrik and Madlener, Reinhard, An Econometric Analysis of the Determinants of Passenger Vehicle Sales in Germany (April 1, 2018). FCN Working Paper No. 06/2018. Available at SSRN: https://ssrn.com/abstract=3239373 or http://dx.doi.org/10.2139/ssrn.3239373

Yu Zeng

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

HOME PAGE: http://www.rwth-aachen.de

Hendrik Schmitz

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany
+49 241 80 49834 (Phone)
+49 241 80 49829 (Fax)

HOME PAGE: http://www.fcn.eonerc.rwth-aachen.de/cms/~dndh/E-ON-ERC-FCN/

Reinhard Madlener (Contact Author)

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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