Abstract

This paper examined the factors influencing Chinese auto demand from 2001 to 2013, using multi-regression analysis. This study also investigated the effects of the recent global financial crisis on Chinese automobile demand, and compared the results with those found for three different periods of time. According to the empicral results, the main factors influencing the quantity of Chinese automobile demand before the global financial crisis were the price of automobiles, the price of gasoline, the lending rate and the personal disposable income. The main factors of influencing the Chinese auto demand during the global financial crisis were the price of automobiles, the lending rate and the personal disposable income. Only one main factor influenced Chinese auto demand after the global financial crisis, and this was the personal disposable income. The income elasticity of the demand was 0.270, 0.928 and 0.243 before, during and after the global financial crisis, respectively. The results show that automobiles are a normal good and that the personal disposable income is a very important factor in people’s decisions whether or not to purchase an automobile in China. Moreover, automobiles were almost a luxury good during the global financial crisis, with the influence of personal income rising more three-fold during this period. Furthermore, the effects of the global financial crisis on Chinese automobile demand has been very significant.

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