Perspective Of Car Market Effect Under Income Change

Owing to China’s economic development in recent years, people’s income isincreasing overall and automobile consumption is also in rapid growth. Residents’income in China is increasing quickly and unbalanced. As the same time, car marketalso reflects the unbalanced development situation accordingly. Residents’ income inChina in2011is3.31times as much as it was in1997, gap between rich and poor isalso increasing rapidly. At the same time, car market is developing rapidly, in1997,car ownership per hundred people was0.19, and it is18.58in2011.Study on automobile consumption and income started much earlier indevelopment country than in China. But most of the study was focused on twoaspects. One is looking for factors that influence car demanding, such as income andprice. The other one is predicting the development of auto market, such as predictingcar ownership in a certain year. Few people pay attention to the perspective of carmarket effect under income change. How dose income change affects car market, andwhat are the characteristics and regularity of the effect, all of these questions have notbeen paid attention in both empirical and theoretical area. As it was said above,studies both at home and abroad about the income change and consumption of theexisting problems, we think that China’s urban and rural residents income change andincome distribution change is the cause of a variety of commodity market unbalancedsupply and demand phenomenon.The theory is called perspective of called car market effect under income change.We will analysis perspective of called car market effect under income change basedon the theory. The purpose of this paper is to explore the relationship betweendifferent income and the demand for passenger car while the income is changing. Wewill also discover the law of marginal utility of income on demand when income isincreasing. In this paper, we use annual data from the China statistical yearbook. Thedemand for passenger cars is interpreted variable. The data is household carownership among every hundred households at the end of the year. Residents livingstandards is interpreting variable. All of the data was grouped according to differentincome level. The income data of different years has been processed so that they arecomparable with each other. In this paper, we use fixed effects panel data model withVariable coefficients to analyze the data.In order to observe the effects of income changes in demand for passenger cars,we analyzed the estimated results of different groups under different income levels.Through the analysis above, we come to the conclusion that:(1)People with lower income are being able to afford automobiles. When incomereached10000yuan, people with above average income, people with high incomeand people with the highest income were able to afford cars. When income was morethan12000yuan, people with below average income, people with above averageincome, people with high income and people with the highest income were able toafford cars. When income was more than14000yuan, people with below averageincome, people with average income, people with above average income, people withhigh income and people with the highest income were able to afford cars. While whenincome was more than17000yuan, people with all levels of income were able toafford cars, except for people with the lowest income.(2)The marginal utility of income on demand shows different characteristicswhen using data from different time span. When income reached10000yuan, themarginal utility was growing more and more quickly as income increased. Whenincome reached12000yuan and14000yuan, the marginal utility was growing moreand more quickly at first, but then slowed down. When income reached17000yuan,the marginal utility was first raised and then...