A factor that most directly affects the demand for automobiles


One of the most important factors that affects demand for automobiles is their price. For example, a car might cost $10,00 in one country but another company may charge twice as much in another country because it has more expensive labor costs. The difference in prices can have an effect on how many cars are sold from one country to another and this is why international trade agreements exist.

Another important factor that affects demand is the transportation infrastructure. For example, a country can have roads and highways in good condition or they may not be paved at all. If there are no working cars for sale due to lack of transport infrastructure then people will need to buy one from outside sources which increases demand on those other countries as well.

ford, mustang, car @ Pixabay

A third factor affecting automobile demand is consumer credit availability. Consumers typically take out loans with collateral such as their house when buying an expensive car but if housing prices drop then it becomes more difficult to get financing because banks lose money since homeowners defaulted on their loans so consumers might settle for less costly vehicles instead.


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