The market valuation of new car quality

The study examines the question of whether the new car market values put a premium on superior quality cars while penalizing those cars that are of relatively inferior quality. The results suggest that the market does value cars that ex post have a much better than average or better than average reliability rating based on the criteria used in Consumer Reports. Moreover, cars that perform relatively poorly in terms of reliability ratings have a lower associated price, all other things equal. Finally, the results show that the market does value safety as a quality characteristic.