Valuation of quality attributes in the price of new economy cars

Abstract

The purpose of this study is to value the quality attributes of economy car models, that is, vehicles with a 1000 cc engine. With the liberalization of the domestic automotive market, the sector has been experiencing a growing market development and technology expansion which allows for the sale of more varieties and types of vehicles, each with a wide range of options, accessories and comfort items available as options for consumers. Based on the available attributes for each item, the consumer will choose those he perceives as useful depending on his perception of usefulness and quality. Among the different methods of quality valuation, this paper explores the theory of hedonic prices. According to the model proposed, it is possible to identify that the brand is the main attribute of valuation in the composition of the price of economy cars. At this point, it is possible to observe the companies' actions in the attempt to reposition their products in the consumer's mind. In comparison with similar studies, it is possible to notice that economy cars have evolved in terms of accessory availability. These results can also contribute as a point of reference for the automakers to better plan the vehicle, giving priority to types of vehicles that are consistent with the preferences of their consumers