FACTORS INFLUENCING INDIVIDUAL PURCHASES OF MOTOR CARS IN GREAT BRITAIN1
| Published date | 01 August 1975 |
| Date | 01 August 1975 |
| Author | B. C. ISHERWOOD,J. F. PICKERING |
| DOI | http://doi.org/10.1111/j.1468-0084.1975.mp37003004.x |
FACTORS INFLUENCING INDIVIDUAL PURCHASES
OF MOTOR CARS IN GREAT BRITAIN1
By B. C. ISHERWOOD and J. F. PICKERING
I. INTRODUCTION
The motor car has now become an important item in the patterns of ownership
and expenditure of many households in affluent societies. In addition, the health
of a domestic motor manufacturing industry is often of major importance to the
state of an economy. Yet it is apparent that patterns of expenditure on motor
cars are volatile, sometimes increasing and sometimes falling, even at a time when
expenditure on other commodities continues to rise. To explain this phenomenon
various commentators have suggested that purchases of motor cars in particular
and consumer durables in general are sensitive to ebbs and flows of consumer
confidence and that such influences on the willingness to purchase need to be taken
into account together with income levels, credit conditions etc. that reflect the
ability to buy in predicting the level of purchases.
A number of studies have investigated different aspects of the demand for
motor cars. Some have concentrated upon time-series, investigations, others have
used cross-sectional analysis. Some have relied largely upon explanatory variables
which might be described as largely economic in content while others have intro-
duced indicators of the social status, attitudes, perceptions and buying intentions
of the households being studied.
Numerous time series investigations have been carried out based primarily
upon income and stock-adjustment considerations with, in some cases, the inclusion
of prices and credit availability (e.g. Farrell 1954; Suits 1958 and 1961; Odling-
Smee 1968). The income elasticity of demand has normally been found to be
considerably greater than unity but such models have often been found not to
offer very reliable predictions of variations in the demand for motor cars. Farrell
commented that this type of model was probably more effective in periods following
a war or during a slump and Odling-Smee commented that the result he obtained
was 'extremely unsatisfactory. . . as it is equivalent to saying that we do not know
what causes the main changes in the growth of the stock: we only know how the
changes are propagated in the following quarters. It also makes it extremely
difficult to give accurate short-term forecasts because of our ignorance about the
disturbance term which often turns out to be rather large' (Odling-Smee 1968,
p. 203).
Investigators working within what might be termed the area of behavioural
economics have argued that this problem can be overcome by the use of direct
surveys of consumer confidence and/or intentions to buy. The evidence has been
extensively reviewed in various publications (e.g. in Strumpel et al. 1972; Ferber
IThis is one of a number of papers arising out of research funded by the SSRC under the
direction of J. F. Pickering on the demand for consumer durables. It was prepared while the
authors were at the University of Sussex. 227
228 BULLETIN
1973) and the general position seems to be that it is agreed that measures of
consumer attitudes do help to improve the predictive power of short-term forecasts
of the demand for cars but the evidence on the contribution of measures of purchase
expectations is less convincing.
Some cross-sectional investigations have incorporated information about
household characteristics and expectations in attempts to explain car purchases
(De Janosi 1958-9; Kreinin 1959; Kreiniri and Lininger 1963; Bennett 1967).
Among the results of such studies, personal incomes, car ownership, the age of the
head of the spending unit, the liquid assets of the household, the financial position
of the household compared with a year ago, and car buying intentions have all
been found in at least some of the investigations to be significantly associated with
car purchasing. The cross-sectional predictive value of car buying intentions or
purchase probability information has also been confirmed in other studies (see the
reviews in Strumpel et al. 1972; Pickering and Isherwood 1974).
Other studies have attempted to investigate the extent to which psychological
information collected from households can be used for market segmentation
purposes to explain the type of car they own (Westf all 1962) and whether they will
buy new car models or new cars left over from the previous year's output (Wiseman
1971). Using Thurstone scaling techniques Westfall showed that owners of
convertibles were more active, more impulsive and more sociable than other types
of car owner. Wiseman found he was able to distinguish successfully buyers of
the new year's models from the buyers of new cars from the previous year (left
overs) in terms of differences in their shopping patterns, usage expectations,
economy mindedness, attitudes to styling, as well as in terms of basic socio-
economic and demographic characteristics.
This review of other studies suggests that different types of attitudinal and
expectations information do have an important contribution to make alongside
economic variables in the study of the demand for motor cars. In this paper we
shall report the results of a further and more extensive cross-sectional investigation
of the hypothesis that purchases of cars are a function of both the ability and the
willingness of households to make purchases. Besides using measures of the socio-
economic status of the household, consumer confidence indicators and purchase
probability information, we have also incorporated indications of consumer
perceptions of the characteristics of motor cars to test the hypothesis that pur-
chasers are more likely to take a different view of the desirability of owning and
buying a car than non-purchasers.
II. DATA AND METHODS
A survey of two random samples of households in Britain was conducted in
the early part of 1971 in which the higher income groups were somewhat over-
represented compared to the national distribution and a postal follow-up was
conducted with the same samples after 14 months, in the summer of 1972. In the
first survey information was collected on the socio-economic position of the
household, on the ownership of consumer durables, on the attitudes and expecta-
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