UC Irvine Institute of Transportation Studies

Given our current shortage of petroleum there is a great deal of interest in conservation. It has been argued elsewhere that the single most effective means of reducing gasoline consumption is the promotion of fuel-efficient cars (Lave, 1 and 3). What are the factors which determine the sales of such fuel-efficient cars? For most of our recent history, “fuel efficient cars” and "imported cars" have been almost totally overlapping categories; hence a model of the relative market share of imported cars, across states, can potentially tell us a good deal about ways of increasing the sales of fuel efficient cars, whether they are imported or domestic in origin. 

This paper explains the market penetration of imported cars in the 1975 new car market; variables are the demographic and geographic characteristics of the state. Our model explains 92% of the variation in market shares across states, and all of the regression coefficients are significant and have the expected signs. The largest single explanatory factor appears to be variation in marketing effort by the import manufacturers. The next most important factor, though considerably less po~rful, is the relative education level in the state. Both factors, marketing effort and education, have strong positive effects on market share.