Incentives and prices for motor vehicles: what has been happening in recent years?

Carol Corrado, Wendy E. Dunn and Maria Ward Otoo
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Wendy E. Dunn: https://www.federalreserve.gov/econres/wendy-e-dunn.htm

No 2006-09, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We address the construction of price indexes for consumer vehicles using data collected from a national sample of dealerships. The dataset contains highly disaggregate data on actual sales prices and quantities, along with information on customer cash rebates, financing terms, and much more. Using these data, we are able to capture the actual cash and financing incentives taken by consumers, and we demonstrate that their inclusion in measures of consumer vehicle prices is important. We also document other features of retail vehicle markets that interact and overlap with price measurement issues. In particular, we construct vehicle price indexes under different assumptions about what constitutes a \"new\" product in moving from one model year to the next. For the period that we study (1999 to 2003), a period during which incentives became more widespread and new model introductions rose, our preferred price index drops faster than the CPI for new vehicles.

Keywords: Automobiles - Prices; Automobile industry and trade (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2006-09

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