Dimensions of Automobile Demand: An Overview of an Australian Research Project

Abstract

The major objective of the study of the dimensions of automobile demand (1981–1988) is to obtain reliable forecasts of the variables which drive the fundamental energy equation: energy consumed (litres) = efficiency of technology (litres per 100 kilometres) × utilisation rate (kilometres per period). Since the level of utilisation is unlikely to be independent of the state of technology, and since both dimensions are conditioned by the state of the economy and the nature of households as well as by the extent of corporate-sector support to the household sector, it is necessary to view the levels of vehicle usage and vehicle fuel efficiency as outputs of the broader household decision process.

This broader context can be represented by a study of the household's choice of automobiles (by number and composition) and level of utilisation. This perspective enables us to view vehicle efficiency and utilisation as derivatives of a study of the household's demand for mobility services, which is derived from the demand for end activities (consumption of goods and leisure). Since we are especially interested in the role of fuel prices and vehicle technology in the household's decision on the level of vehicle utilisation, it is desirable to monitor the response path of a sample of households over a period of time. A single cross-section approach cannot identify the influence of changing fuel prices on vehicle use, nor can it adequately accommodate the temporal relationship between vehicle purchase/disposal decisions and the utilisation rate. To represent satisfactorily the role of policy variables (for example, fuel prices, taxes associated with vehicle possession, standards for vehicle technology) in the context of the wider set of influences on household automobile possession and usage, the study members have developed an econometric model system which jointly models the household's choice of vehicles and utilisation level over the period 1981–1985. This paper provides an overview of the theoretical, methodological, and empirical dimensions of the project and, where appropriate, introduces some preliminary findings. The project in its entirety is due for completion in late 1988.