With the number of optional features on vehicles increasing year on year, which features do customers really value the most? In this insight, we will be taking a look at how the market views these features by analyzing their price elasticities from Model Year 2019. This will show us how changes in pricing impacts the demand for the feature from the customer.

To generate this insight, data for the nine features chosen (Adaptive Cruise Control, Blind Spot Monitoring, Lane Departure Prevention, Premium Audio, Wireless Charging, Head-up Display, Ventilated Seats, Heated Steering Wheel and Heated Drivers Seat) for every trim of each model sold in 2019. This allows us to create trendlines for each of the features so that their price elasticity can be analyzed.

This chart shows us the interaction between the features package MSRP as a percentage of the vehicles MSRP and the features penetration rate. With price elasticity curves, the steeper the trendline, the more flexible people are with how much they are willing to pay for the given feature.

 

 

The overall trend shows us the expected result, commonly theorised in economics as the 'demand curve', as price increases, demand decreases. The steepness of the curve shows the customers sensitivity to price, and by looking at the chart, we can see that Adaptive Cruise Control has customers reacting most strongly (inelastic demand). Heated seats are seen to be the most resiliant to price change as they show the flattest curve (elastic demand).

We also observe something very interesting within certain comfort and convenience features, namely wireless charging and heated steering wheel; we found that as package price as a percentage of MSRP increased, so did the percentage penetration rate of these packages. Upon investigation, we found that these two features are overwhelmingly featured in larger packages, which justifies the higher package price to customers.