| dc.description.abstract | In recent years, gas price in Taiwan has been fluctuating greatly under the influence of international natural gas prices. Besides, in the past years, on the demand side of our new car market, only a few studies have been done considering the auto sale prices, fuel consumption, and auto characteristics. The purpose of this study is to explore when buying cars, will consumers pay more attention to the fuel efficiency of the model than other car features, as well as the relationship among gas price, car price, and the demand of cars. A nested logit model was developed based on discrete choice model, in which the data of the auto sales, observable features, and the gas prices during the period from 1997 to 2011 were used to estimate the consumers’ preference toward the demand of different products.
The research findings include: first, when the gas price goes up, the fuel consumption per mile will rise, which will lead to the falling of the car sale. This also indicates the consumers’ sensitivity toward the changes of the gas price. Secondly, the negative correlation between fuel efficiency and car features reveals that consumers’ preference toward the weight of the car is significant. Nevertheless, no evidence can support that the horse power of the car will significantly affect the car sale. Finally, the average price elasticity of auto demand in Taiwan is up to -4.12, which is higher than that of the American auto market. This also indicates that consumers in Taiwan are highly sensitive to auto prices, and there is a keen competition in the local auto market.
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