Consumer valuation of new car attributes: An econometric analysis of the demand for domestic and Japanese/Western European imports

Although previous studies of new vehicle choice decisions have shown that consumers evaluate the attributes of domestic vehicles differently from those of imported vehicles, the assumption underlying these results is overly restrictive. In particular, there is no reason to assume, a priori, that the attributes of all imported vehicles have similar effects upon consumer choice behavior. A competing hypothesis, for example, is that consumers of U.S. and European automobiles have similar attribute valuations that are differentiated from those of Japanese consumers. In the present paper, a multinomial logit model of vehicle type choice is developed which more completely differentiates imports by country of origin. Using a 1985 national sample of new car buyers to estimate the model, willingness to pay measures were calculated and nested hypothesis tests on attribute valuation performed. The results supported the hypothesis that consumers value vehicle attributes differently depending upon its country of origin. Moreover, consumers do not have similar valuations on the attributes of all imports implying that an arbitrary distinction between domestic and imported vehicles may produce misleading results.