Chapter 6: Measuring the Market Efficiency of Chinese Automobile Industry by Using a Max-Min Dea Model

The automobile industry plays a fundamental role in the economic growth of China, and enhancing the sales of the automobile market is important to the development of the Chinese automobile industry. Aiming to better cognize the automobile market, the current chapter tries to discover what factors influence the sales of automobiles in China, and whether the allocation efficiency of the Chinese automobile market is injured by the existing industry policy. We collect 100 representative Chinese vehicle types as samples and gather data about the operational management of those automobile manufacturers. With the help of the efficiency market hypothesis, two different functions (linear and exponential) are proposed to determine the functional relationship between sales and the influencing factors such as price, quality, sale service satisfaction index, and after-sale service satisfaction index. We use a max–min programming format of DEA technique to maximize the efficiency scores of the sales allocation and determine which function form is suitable to characterize Chinese auto sales. The data analysis helps to get the major influencing factor and unearth why the efficiency market hypothesis does not stand in the Chinese automobile industry. We also analyze the efficiency of Chinese automobile market from the perspective of the various brands, and discuss why the varying scale or shareholder structure of automobile manufacturers leads to the sales allocation efficiency to distribute variously.