The Demand for Light Duty Trucks: The Wharton EFA Motor Vehicle Demand Model (Mark II)

Loxley, Colin J.; Luce, Priscilla; Osiecki, Tim; Rodenrys, Kate · 1981 · ROSA P / United States. Department of Transportation. National Highway Traffic Safety Administration

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Summary

This paper presents the development and results of the Wharton EFA Motor Vehicle Demand Model (Mark II), an econometric framework designed to forecast and analyze the demand for light-duty trucks (LDTs) under 10,000 lbs. gross vehicle weight. Commissioned by the U.S. Department of Transportation’s National Highway Traffic Safety Administration, the study supports rule-making for the Automobile Fuel Economy Regulation program. The research extends previous automobile demand models by integrating LDT analysis, distinguishing between personal-use vehicles (vans, pickups, SUVs) and commercial-use vehicles. The primary objective is to assess the joint impacts of government policies and economic environments on both car and truck markets. The methodology employs a long-run, annual econometric approach using both cross-sectional data from 1976 state estimates and time-series data from 1958–1976. The model structure separates the market into personal vehicles (automobiles plus personal LDTs) and commercial LDTs. Desired stock levels are estimated via cross-sectional analysis, while realized values—including new registrations, scrappage, vehicle miles traveled, and purchase prices—are determined by the gap between desired and actual stocks, adjusted for transitory income and cost fluctuations. Key determinants include permanent disposable income, income distribution, capitalized costs per mile, suburbanization rates, and specific economic activity variables for commercial trucks. The findings reveal distinct behavioral patterns between vehicle categories. Personal vehicle and automobile demand are strongly linked to similar determinants, such as income and operating costs. In contrast, commercial LDT demand is driven by sector-specific income (agriculture, construction, trade), rural road mileage, and demographic factors like the proportion of the population over 65. Statistical estimation showed that personal LDTs consistently had weaker explanatory power than automobiles, leading the authors to derive personal LDT desired stocks as a residual. Forecast results for 1978–1988 predict that personal LDT sales will continue to outpace automobile sales, with personal LDT registrations growing at an average annual rate of 6.2 percent compared to 1 percent for automobiles. By 1988, personal LDTs are projected to comprise 13 percent of the vehicle stock, up from 14 percent in 1978, while commercial LDTs grow at 5.2 percent annually. The significance of this work lies in its ability to provide integrated policy analysis for fuel economy regulations. The model demonstrates that personal LDTs are increasingly purchased for leisure and recreational purposes, particularly in urban areas, making them sensitive to income distribution and urbanization trends. Conversely, commercial LDT usage remains tightly coupled with broader economic activity. The study highlights that high purchase price growth and inflation will slow overall vehicle stock growth below historical trends. By quantifying these dynamics, the model offers policymakers a tool to evaluate the long-term effects of fuel standards, tax policies, and economic shifts on the composition of the U.S. motor vehicle fleet.

Key finding

Personal-use light truck demand is determined by the same factors as automobile demand, while commercial-use truck demand is driven by distinct economic activity variables such as income from agriculture, construction, and trade.

Methodology

modeling

Provenance

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