What’s ailing the U.S. auto industry could be that it’s not redesigning its products nearly enough, according to a study by three economic professors at Virginia Commonwealth University.
The study, titled “Non-Price Determinants of Automotive Demand: Restyling Matters Most,” found that U.S automakers saw their market share drop from 72.9 percent in 1996 to 47.4 percent in 2008. Between 1995 and 2006, Japanese manufacturers restyled their vehicles every third year, while the U.S. manufacturers restyled every four years.
The study found that restyling “represents the dominant determinant of demand in the auto industry.”
A carmaker would have to double its advertising spending to match the impact of restyling, according to Oleg Korenok, the lead author of the study. Professors George Hoffer and Edward Millner were co-authors. The study will be published by the Journal of Business Research.