Could Restyling Be the Key to Selling Cars?
So argues a group of economists from Virginia Commonwealth University. In their paper “Non-Price Determinants of Automotive Demand: Restyling Matters Most” published in the Journal of Business Research, they argue that Detroit’s share of the auto market has fallen from 73% in 1996 to just 47% in 2008 because the Big Three don’t restyle models often enough.
During the period of decline from 1995-2006, Japanese automakers restyled their vehicles every third year on average; Detroit averaged four years per vehicle restyling. According to the report, this discrepancy “better explains the 25.5 percent market-share loss for domestic manufacturers over this period than more-often cited factors such as reliability differentials as cited by Consumer Reports.”
That’s a bold explanation, and the report goes further in suggesting that Detroit’s path back to profitability is through restyling instead of price cuts, advertising and even additional safety equipment. They claim a 10% relative price cut would have only a tenth of the impact on market share as restyling a vehicle does.
This doesn’t mean that automakers should jettison vehicle line names because rebranding — such as when Ford briefly dropped the Taurus name — has an “adverse market impact.”
