Analysis on Car Elasticities: A Comparison on Toyota and Other Brands in Thailand
10 Pages Posted: 29 Jun 2017
Date Written: June 19, 2017
In this paper, we have compare the price and income elasticities of demand between cars of Toyota against Nissan and Ford. The main findings are that:
1) Nissan and Ford are treated as more luxurious than their Toyota counter parts for small cars. For very large cars, on the other hand, price elasticities are positive.
2) The small cars are all treated as inferior goods, but not the very large cars.
3) Comparing between 2014-15 and 2016-17, the small cars are treated as less inferior and the large cars are treated as less luxurious.
These results are not only important to point out the changing behaviors of Thai consumers. They suggest the change in the state of the economy after 2014. The main event in 2014 is the start of the NCPO government on May, 2014.
However, this study suffers from several limitations. They are as the following:
1) Car consumption is not only dependent on income. There are factors such as popularity, sales promotion, and the continuously launch of new cars. People may tend to appreciate newly released cars more.
2) Data is limited. The data is not from the whole year. This is because the inconsistency of the data source. However, this is inevitable because a more detail reports of car quantities are the companies’ secret.
3) Car prices do not usually change. The percentage change in cars price will be small and causing the elasticity to be very large, despite a relatively small change in the quantity bought.
Therefore, this study can be expanded using a more complex analysis including these factors. This study shows that, overall the elasticity of car demand is theoretical sounding, but the pattern of car consumption cannot be studied using price or income alone.
JEL Classification: D01
Suggested Citation: Suggested Citation