Determinants of new vehicle registrations in EU countries: a panel cointegration analysis

Abstract

This paper investigates the determinants of new vehicle registrations in European Union (EU) countries by focusing on four particular segments – passenger cars, light commercial vehicles, commercial vehicles, and heavy commercial vehicles. A panel cointegration analysis for a panel of 13 EU countries during the period from January 1999 to August 2010 shows that new vehicle sales have long-run cointegration relations with vehicle prices, consumer confidence, income, interest rates, fuel prices, industrial production, and trade. More effective factors in determining new vehicle sales appear to be trade, interest rates, and industrial production.

Keywords:

• demand theory
• macroeconomic variables
• new vehicle sales
• EU countries
• panel cointegration