A Research On Market Structure And Performance Of China’s Automobile Industry

According to China’s accession with the World Trade Organization commitments,Since2002, China’s automobile market has been opening to the outside worldgradually, China’s automobile industry competition and business environment havebeen changing in deepth. In this context, it is very necessary to study on the currentsituation of China’s automobile industry, and draw the plans for its furtherdevelopment.In the traditional industrial organization SCP model analysis, the relationshipbetween structure, conduct and performance can be summed up as following: Marketstructure affects the market behaviors, and then influences the market performance. Inorder to get the optimal market performance, one can adjust and improve marketstructure. Taking the the relationship between structure, conduct and performance asthe main line, this paper analyzes the current status of market structure and marketperformance in our country and takes the market concentration rate (CR4) as themarket structure indicator, and the profit margin (L) as the market performanceindicators. It uses the method of regression analysis to analyze the relationshipbetween the concentration and profit margins. Results show that the market structurehas a positive relation with the market performance. This paper then takes the marketconcentration as the explained variable, and takes some factors as the explanatoryvariables, such as the investment in research, the advertising budget, the number ofemployees, the growth rate of market demand, the rate of new entrants, the productionexpansion ability, the total energy consumption, the building area, the growth rate ofproduction equipment. This paper uses the relevant analysis and multiple regressionanalysis model, uses EVIEWS statistical software for data analysis. Regression resultsshow that some factors such as the growth rate of production equipment, the rate ofnew entrants have small correlation coefficients with the market concentration rate,and some factors such as the building area and the number of employees has nosignificant influence on the market concentration rate. The major factors that affectthe market concentration of China’s automotive industry are the investment inresearch, the advertising budget, the market demandsand the production expansion ability. And the three factors include the investment in research, the advertisingbudget and the market demandsand have positive influence on the marketconcentration, among which the advertising budget has the biggest influence.Theproduction expansion ability have negative influence on the market concentration.According to the regression results, this paper proposes some suggestions onoptimizing the development of China’s automotive industry. First, improve theresearch and development capabilities of China’s automotive industry. Second,increase the investment in industry advertising. Third, improve economic scale ofChina’s automotive industry.