Microeconomic Factors Including Inflation, SUV

Finally the vehicle price less customer incentives and rebates (cash and incentives) are used as the variables to complete the partial correlation.

Table 2 Partial Correlation Descriptive Statistics

Mean

Std. Deviation

TOTAL MIDSIZE SUV UNIT SALES

Total Down

Percent Financed

Total Down (%)

Trade in (%)

Type of Sale Cash (%)

Type of Sale Finance (%)

Type of Sale Purchase (%)

Type of Sale Lease (%)

Vehicle Price Less Customer Cash Rebate

Average U.S. Gas Price

Table 2, Partial Correlation Descriptive Statistics shows the results of the initial analysis. With the number of periods being 14, and controlling for gas price this analysis shows that the majority of mid-size SUV vehicles buyers were financing, taking advantage of aggressive incentives on the part of manufacturers. See Figure 1 for an analysis of cash and incentive spending by SUV model.

Notice that the median level of spending is approximately $3,000 per unit for cash and incentives and with the variable entered into the analysis a correlation matrix is produced, and shown in Appendix a: Full Correlation Analysis with Cash & Incentives Included. Cash and Incentives have a.01 level of significance (.847 correlation) with motivating buyers to trade in their vehicles. Gas prices also show statistical significance in influencing cash and incentive effectiveness to in turn influence trade-ins. The bottom line is that the higher and more volatile the gas price, the more buyers rely on leasing, and initially appear to be motivated to trade-in their previous vehicles to qualify for the cash and incentives on chosen vehicles.

References

AutoData Database (2008)- Cash and Incentives Spending Analysis of the SUV Marketplace. Accessed during the week of September 15th with permission from the research provider.

Global Insight Vehicle Database (2008) – Forecasting from the heavy Vehicle Shipment Reports during the week of September 1st with permission from the research provider.

J.D. Power Product Information Network (2008) – a series of trending reports were completed using JDPA PIN databases during the week of September 1st with permission from the research provider.

Monthly Energy Review (2008) – Data used in the analysis accessed the week of September 1st from the Website: http://www.eia.doe.gov/emeu/mer/petro.html

James Politi (2008, June 12). Feds economic survey offers some cheer. Financial Times,4. Retrieved September 12, 2008, from ABI/INFORM Global database. (Document ID: 1493912351).

R.L. Polk Insight Database (2008) – a series of queries was completed the week of September 8th using the specific variables mentioned. The Appendices include the results of the analysis.

Appendix a: Comparison Analysis for 14-month Analysis

COMPARING BODY on FRAME SUV vs. CROSS-OVER (UNIBODY) SUV SALES

Body on Frame SUVs Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 CHEVROLET – TRAIL BLAZER 21,252 19,767 18,718 16,091 12,140 11,277 15,901 12,286 11,162 12,915 10,791 13,939 13,716 14,013 CHEVROLET – TRAILBLAZER EXT 7,445 6,377 6,070 5,112 4,980 4,396 4,801 5,311 3,020 2,727 2,076 1,925 1,948 2,301 CHEVROLET – TRAILBLAZER SS 1,165 FORD – EXPLORER 28,369 29,592 19,646 14,476 13,137 11,932 16,512 16,030 17,739 17,206 14,493 18,373 17,832 15,930 GMC.

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