Title

Do car reviews matter? : an econometric analysis on the influence of car reviews on car sales in the U.S. auto market.

Date of Award

5-1-2016

Document Type

Thesis

School

College of Liberal Arts

Degree Name

Bachelor in Arts

Abstract

This thesis aims to find if car reviews influence car sales in the U.S. auto market through an econometric analysis. Since there is no free data source that conveniently provides car sales, car reviews, and control variables in a spreadsheet, a data set was constructed by collecting data from various sources. Review data was collected from U.S. News and World Report, a free source that used advertisements and press cars, and Consumer Reports, a non-free source that displays no advertisements and buys the cars it tests. Sales data was collected from GoodCarBadCar.com. Control variable data was collected from the Environmental Protection Agency for fuel economy data and Edmunds.com for horsepower data and pricing data. Once the data set was collected, two separate econometric models were built; one to investigate if U.S. News and World Report influenced sales, and one to see if Consumer Reports influenced sales. It was found that both U.S. News and World Report and Consumer Reports influenced car sales in the U.S. auto market. Other notable results were that U.S. consumers prefer larger cars over smaller cars, were indifferent on fuel economy, preferred cheaper cars, were indifferent on horsepower, and preferred American brands. Having extra data available, two more regressions were created to directly compare U.S. News and World Report's influence on cars sales to Consumer Reports' influence on car sales. The results suggested that U.S. News and World Report had a stronger influence on cars sales than Consumer Reports. This is surprising because other literature suggests that consumers prefer review sources that buy their own cars and display no advertisements since they felt those sources were bias free. The thesis concludes that media corporations looking to write car reviews may want to provide them for free, rely on advertising revenue, and use press cars for reviews since sources with those characteristics seem to have a stronger influence on car sales. Auto manufacturers may want to concentrate on obtaining positive reviews, specifically from sources like U.S. News and World Report, concentrate on selling larger car models, and concentrate on making cars more reliable and enjoyable to drive if they want to increase their car sales. This thesis uses a unique data set to perform a regression that has not been performed before, which builds off of previous literature and leaves room for further research on how car reviews influence car sales.