Political Discussions
Cars, Supply and Demand
Posted by Agit8r • 3/06/09 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: auto bailout, golden airbag
If demand for cars goes down, shouldn't price go down until there is demand? Or does the auto industry run according to the Labor Theory of Value?
User Comments
-
If the demand goes down, prices will go down or they won't sell any. -
It would seem that way, wouldn't it.
-
If demand goes down, production will go down, and cars will either remain the same price, or be priced higher because they will level the supply according to the demand.
Only those already on the lots will go down in price.-
@Anok: Not if they feel they need the production later. Still, your basic point is a good one, that production does fluctuate.
-
-
Think the UAW believes in the Labor Theory of Value?
-
I dunno. You should ask them
-
-
wonder what their mailing address is... must be here online...
-
probly a good way to get my blogging-fingers broken by union goons
-
You can type with your toes.
-
-
right, plus they may have downsized on goons
-
It is not that the auto industry runs on labor theory value, it is that the UAW does. The UAW seems to think (or at least wants to believe) that the Big Three has secret money trees growing in their back yards and is hiding the money from them. The UAW must understand that these corporations are in a whole heap of trouble (in large part because of the UAW themselves) and cannot afford such lavish pensions.-
Well, unless you're a CEO - then lavish away!
It's not that they don't have the money - it's that they don't know how to manage it. -
Anok- At this point there are really only 2 options for Detroit (unless you want to see billions of dollars dumped into the companies every quarter). First, they can file for chapter 11, renegotiate with the UAW, or if they cannot renegotiate, they just dump the UAW all together. The other option is go out of business permanently. It is just absolutely absurd that these companies think that they can just keep coming back asking for more money and expect to get it.
-
Right, Toyota employees aren't living in the gutter. Detroit is a sort of Despotism of the Proletariat.
-
I say dump the companies altogether. Let 'em die. *shrug*
The unions that work with them did not cause their economic collapse. The company's inability to manage itself did.
-
-
As in the bankruptcy thread, GM suffers from a lack of connection between Management interest and Ownership interest. Ford much less so, which explains why it is doing better. And yes the UAW was what I was poking fun at:)
-
Ford also started downsizing a couple of years ago and trying to reconnect with consumer desires.
-
-
Last I heard, they were not going to need to be bailed out.
-
U.S. auto manufacturers don't make a lot of money off the cars. They make most off parts, which is why it's more profitable for them to make cars that break down. Not a very good business model, but that's the way they've operated for quite a while.-
I thought that they made money off of financing
-
Funny then isn't it that the cars put out today last much longer than the cars manufactured two or three decades ago? I remember as a teen looking for my first car and my Dad saying to stay away from that car. It had 70.000 miles on it and he said that it wouldn't last much longer. Now you can go to used lots and buy cars with 70,000 miles on them every day.
So unless you can provide some scientific studies, sati. You are just spouting rhetoric - as usual.
-
-
-
spamtastic!
-
-
Only partially true.
the profit margin can be sliced somewhat, but the car can't just drop in price until people will buy it at that level. There is too much cost involved in making it that has to be recouped.
At reducing demand, cars fitting that demand (i.e. cheap) will increase, but a lexus will never be cheap) they'll either try to manufacture a less costly car. The lines they have now will remain with either smaller numbers, or they'll try to get higher market shares of the remaining market.
The only thing that is purely demand driven is labor, and minimum wage opposes that as well. -
Mass produced cars are already cheap. Cars became affordable to the mass market when Ford started mass producing the model T.
Of course mass production as a means for reducing Unit cost only works when you have a mass of consumers ready and able to buy your product.
Today car manufacturers need to reduce their production and labour to lower their costs however their most significant overheads are loans they have taken out to invest in their manufacturing process's/ equipment/ plant. Not much they can do about these loans (hence bail outs).
Less cars produced and intransigent overheads. If anything car prices are set to increase. -
Good question Agit8r. We should ask the head of General Motors. I know I would like to hear what Obama thinks about this...
Add Your Comment
Login to leave a message.
