Market shares in the UK passenger car market: marketing, expenditure and price effects, 1975-80

The share of the UK passenger car market maintained by imports rose from 6% in 1966 to 56% in 1980. The reasons for this increase have been studied in a number of areas. Here, the role of marketing competition in the UK market is analyzed. This is accomplished in the form of a comparison of 2 types of econometric models. The current empirical models of market shares are studied. Next, the role of model types is discussed and a very simple model is estimated in which market shares are interpreted by dealer and model shares. The Almost Ideal Demand System of Deaton and Muellbauer (1980) is applied to the modeling of market shares, and dealer and model shares are employed as conditioning variables. Results indicate the crucial importance to the firm of holding a rational model structure if it is to maintain its market share.