Replacement purchase and dynamic market influence product diffusion, which limits the application of basic product diffusion model. In this paper, the dynamic market variables were constructed to reflect the changes of the market, and the extended product diffusion model was verified with influence coefficients considering replacement purchase and dynamic market factors. The mini cross-type passenger vehicle, which is one segment of China's automobile market, was empirically studied. The factors, including fuel price, product price, policies of the government and repeated purchase, were analysed in the extended diffusion model to analyse the target product diffusion rule. The results have indicated that the fitting degree of extended model is increased by 13% over the basic model, and the mean absolute percent error is decreased from 23.93 to 5.5. Therefore, the proposed extended model with perfect fitness and forecasting accuracy shows better performance in explaining the actual diffusion rule.