4 ms·

This may be temporary, as services like Uber/Lyft increase, and the possibility of Autonomous Vehicles driving down the cost of those services. This would cause

This may be temporary, as services like Uber/Lyft increase, and the possibility of Autonomous Vehicles driving down the cost of those services. This would cause the volume of new cars needed to dramatically fall, leading to increased cost of those new vehicles. This would increase the value of used vehicles that are currently priced in. Would love to hear differing opinions :)

james-skemp 9y ago
> This would cause the volume of new cars needed to dramatically fall [...] I don't disagree with you, but when reading the article you'll notice that the auto industry is pushed to sell more cars, year after year. Like a number of industries, now that they've had years/decades of growth, I'm not sure how they would handle significant loses. Heck, even stabilization. I'm over 35, but consider myself young; was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat?
- marcosdumay 9y ago
  > was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat? Since the Industrial Revolution, I don't think so. Now that you mentioned it, I think the concept of "corporation" is intrinsically related to growth.
RhodesianHunter 9y ago
"Would love to hear differing opinions :)" Erm... A decrease in demand does not lead to an increase in price.
- tmnvix 9y ago
  That's a bit simplistic. Substantial demand makes economies of scale possible which can lead to lower prices. The opposite is also true (i.e. lack of demand leading to increased production costs).
  - RhodesianHunter 9y ago
    Costs do not drive price. Supply and demand do.
- kbutler 9y ago
  Economies of scale apply in reverse as well, and reduced sales reduces the number of items over which fixed costs can be amortized. Decreased demand can lead to decreased production, causing further increased prices and further decreased demand. If the market clearing price rises above the demand curve, production ceases.
  - RhodesianHunter 9y ago
    'Decreased demand can lead to decreased production' Not can, does. You're moving further down the supply curve. 'causing further increased prices' No... less demand leads to less supply at a lower optimum price.
    - kbutler 9y ago
      > No... less demand leads to less supply at a lower optimum price. Not always. If I make fancy handkerchiefs, and I can sell 2 per month, I will make 2 by hand and charge a high price. If there is demand for 100,000/per month, I'll develop a way to mass produce them and charge a lower price per handkerchief (which may further increase demand.) But if demand fades, I won't be able to sustain the equipment/workers that produced the 100,000/ month, and if I continue to produce any, it will probably drop back to a higher price, even at a lower demand. This can occur because of consumer surplus and differing marginal demand. At the mass-producing volume, people who are willing to pay 100x for the product get what they need for a price of 1x. The marginal consumer gets it for exactly the price he is willing to pay. All those less motivated customers drop out at the higher price which is necessary to support a limited production, leaving the 100x customers paying at their maximum price, because no supplier can profitably produce that small an amount for a lower price. For example, obsolete technologies may increase in price as demand goes down.
hammock 9y ago
You live in a bubble, visit middle america

james-skemp 9y ago

> This would cause the volume of new cars needed to dramatically fall [...] I don't disagree with you, but when reading the article you'll notice that the auto industry is pushed to sell more cars, year after year. Like a number of industries, now that they've had years/decades of growth, I'm not sure how they would handle significant loses. Heck, even stabilization. I'm over 35, but consider myself young; was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat?

marcosdumay 9y ago
> was there even a time when the majority of companies didn't care so much about year-over-year growth, and weren't seen as weak if they were stable/flat? Since the Industrial Revolution, I don't think so. Now that you mentioned it, I think the concept of "corporation" is intrinsically related to growth.

RhodesianHunter 9y ago

"Would love to hear differing opinions :)" Erm... A decrease in demand does not lead to an increase in price.

tmnvix 9y ago
That's a bit simplistic. Substantial demand makes economies of scale possible which can lead to lower prices. The opposite is also true (i.e. lack of demand leading to increased production costs).
- RhodesianHunter 9y ago
  Costs do not drive price. Supply and demand do.
kbutler 9y ago
Economies of scale apply in reverse as well, and reduced sales reduces the number of items over which fixed costs can be amortized. Decreased demand can lead to decreased production, causing further increased prices and further decreased demand. If the market clearing price rises above the demand curve, production ceases.
- RhodesianHunter 9y ago
  'Decreased demand can lead to decreased production' Not can, does. You're moving further down the supply curve. 'causing further increased prices' No... less demand leads to less supply at a lower optimum price.
  - kbutler 9y ago
    > No... less demand leads to less supply at a lower optimum price. Not always. If I make fancy handkerchiefs, and I can sell 2 per month, I will make 2 by hand and charge a high price. If there is demand for 100,000/per month, I'll develop a way to mass produce them and charge a lower price per handkerchief (which may further increase demand.) But if demand fades, I won't be able to sustain the equipment/workers that produced the 100,000/ month, and if I continue to produce any, it will probably drop back to a higher price, even at a lower demand. This can occur because of consumer surplus and differing marginal demand. At the mass-producing volume, people who are willing to pay 100x for the product get what they need for a price of 1x. The marginal consumer gets it for exactly the price he is willing to pay. All those less motivated customers drop out at the higher price which is necessary to support a limited production, leaving the 100x customers paying at their maximum price, because no supplier can profitably produce that small an amount for a lower price. For example, obsolete technologies may increase in price as demand goes down.

hammock 9y ago

You live in a bubble, visit middle america