Academic journal article The Journal of Consumer Affairs

Consumer Preferences for Japanese Automobiles

Academic journal article The Journal of Consumer Affairs

Consumer Preferences for Japanese Automobiles

Article excerpt

Japanese cars have taken an increasing share of the new car market in the United States in the past two decades. Their market share increased from approximately 9.4 percent in 1975 to 15.8 percent in 1980 ("Domestic Car Sales" 1976, 1981). This reflected the shift to small cars in the United States after 1978 and the inability of the U.S. automobile industry to compete effectively in the small car market due to substantial cost disadvantages (Crandall et al. 1986). In 1980 and 1981, sales of the U.S. automobile industry declined by about one-third from the 1977-1978 average while profits for domestic producers were negative. This led to Voluntary Export Restraints (VERs) or quotas for Japanese automobiles which initially increased profits for U.S. automobile manufacturers (Crandall et al. 1986). However, the quotas were relaxed in March 1985. In addition, Japanese manufacturers built factories in the United States to avoid import quotas and to save the time and costs of transporting automobiles to the United States. As a result the Japanese share of the car market grew to 27.9 percent by 1990 ("Domestic Car Sales" 1991).

The success of Japanese cars in the early 1980s was attributed to quality, workmanship, and low operating costs (Yates 1984). Japanese cars had a better repair record than most American cars from 1981-1985 ("Frequency of Repair Records, 1980-1985" 1986). While the quality of American cars improved over time the perception that they were inferior to Japanese cars continued (Moskal 1989; Treece, Maremont, and Armstrong 1988). According to Krafcik, U.S. plants had 89 defects per 100 cars versus 47 per 100 in Japanese plants in 1987-1988 (Treece, Maremont, and Armstrong 1988).

The growing number of Japanese cars in the United States leads naturally to questions about Japanese car buyers in the United States. The purpose of this study is to investigate the relationship of automobile attributes and household characteristics to consumer preferences for Japanese cars in 1986. This was eight years after the shift to small cars by many U.S. consumers and was also the most recent time period for which data on durable goods purchases were available. Results of this study should be of use to analysts of consumer behavior as well as to industry analysts who are concerned with factors influencing consumer preferences for Japanese cars. A major finding is that households do not buy Japanese cars because they are small but because of quality considerations.

PREVIOUS RESEARCH

There have been a limited number of studies on the purchase of imported automobiles and only a few used disaggregate data. Studies that have used methodologies that allow for statistical testing include Bartman (1984), Carroll and Green (1988), Dardis and Hrozencik (1985), Lave and Bradley (1980), and Peters (1970). A summary of their findings is presented in Table 1. Peters (1970) found that age and race of household head, number of individuals under the age of 18, and number of cars owned by the household affected the probability of purchasing imported automobiles. Lave and Bradley (1980) focused on ownership rather than purchase of imported cars. They found that education, proximity to the east and west coasts, and number of vehicles owned by the household positively affected the probability of owning an imported car. Bartman (1984) found that white households were more likely to purchase a foreign car and that income was directly related to the likelihood of buying a compact foreign car but not related to the likelihood of buying a subcompact foreign car. Carroll and Green (1988) used Multiple Classification TABULAR DATA OMITTED Analysis and found that age of the household head and absence of children in the household affected demand for foreign cars.

These studies included all size cars in their analyses which may have been a limitation as most imported cars are small. Thus, preferences for imported cars may have reflected preferences for small cars rather than preferences for imported cars. …

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