Local car markets in an emerging economy: exploring the dichotomous nature of car ownership growth

Abstract

The intensive motorization growth observed in emerging and developing economies has attracted increased academic attention. However, many existing studies frequently investigate the car ownership determinants that are typical of Western countries and use aggregate measures that mask the role of imported used cars. This implies that there is an important research gap concerning the role of the second-hand vehicles as a source of car ownership growth in emerging and developing countries. This paper aims to reveal the dichotomous character of car ownership growth in an emerging economy and identify the determinants of local primary (new cars) and secondary (imported used cars) car markets. Using data from the Polish Central Vehicle Register containing entries for more than 20 million cars registered and applying the spatial regression models, we disclose that in addition to well-known determinants of car ownership growth, such as income, population density, and housing types, there may be other factors specific to emerging economies driving this process. Specifically, we test the influence of geographical distance on the source of the car supply and the number of companies and entrepreneurs importing and repairing used cars. The findings suggest that future investigations of motorization processes concerning developing and emerging economies should consider the scale of second-hand car imports and its impact on car ownership and seek country-specific determinants of the phenomenon.