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I’m not sure that it’s insane to kill off profitable products. Some folks were upset recently that Honda is discontinuing the Fit subcompact hatchback in the U

I’m not sure that it’s insane to kill off profitable products. Some folks were upset recently that Honda is discontinuing the Fit subcompact hatchback in the US. That’d be easily understandable if it were an unpopular, unprofitable product. But the Fit was well-loved and dealers struggled to keep them on the lots. So why did Honda kill it? The HR-V subcompact SUV based on the Fit has been produced for the US in the same factory in Mexico and is more profitable and more popular. If you’re Honda, maybe it makes sense to make more of the vehicle that makes twice as much profit and divert resources away from the less profitable model. Still bums me out that I soon won’t be able to buy a new Honda Fit though.

monadic2 6y ago
How does that make sense? On paper they just lose the revenue of the Fit without gaining any new revenue elsewhere. That’s just a loss. It takes some magical thinking to argue that these lost customers will move over to the more popular model, a qualitatively different car.
- ummonk 6y ago
  What I got from that comment is that they're supply constrained, and gain new revenue elsewhere by producing more of the HR-V.
  - monadic2 6y ago
    Why would they think that demand of the HR-V is likely to increase if they remove the fit? I understand removing unprofitable lines, but if it’s making money why fix something that ain’t broken? If they’re worried about competing with themselves, they’ve blatantly told you as a customer the car you want is too desirable for you to have it. Wtf?
    - ytdytvhxgydvhh 6y ago
      They’re supply constrained on both Fit and HR-V. The factory is going all out, but building a new factory isn’t a short term thing. So they can build all of the more profitable HR-V and sell every one or they could mix in some less profitable Fits.
- ytdytvhxgydvhh 6y ago
  If you’re Honda and you’ve got a factory that can make 100000 cars a year, would you rather make 100000 cars that make $2000 profit? Or 50000 cars that bring $1000 profit and another 50000 cars that bring $2000 profit? If you’re Google and you can only find N top notch software engineers, do you want to put any of them on marginally profitable projects?
  - monadic2 6y ago
    I mean, you still need to convince people to buy the cars to get any profit, so I'm not sure what your point is. >If you’re Google and you can only find N top notch software engineers, do you want to put any of them on marginally profitable projects? Presumably this depends on what kind of work is needed. I've never worked at a place where profit is correlated to engineering talent, including and especially at Google. Again, I'm not sure what point you're trying to make.
csharptwdec19 6y ago
It's possible that the Fit fell into a spot where it would be unprofitable under USMCA (The new trade agreement between US, Mexico, Canada.) Under the new agreement more 'value' of the vehicle (be it parts, or the cost of labor to assemble) has to be from within U/C/M to avoid being considered an 'import' and subject to additional tariffs.
Dylan16807 6y ago
But in the long term you'll hit saturation on the more popular model, so you should still invest in any model that clears some ROI bar. Especially when that car (or that google product) is already designed and in production! And an already-working piece of software is much easier to keep running than a car production line. It needs servers but Google has a nearly infinite supply of servers for sale. The constrained resource is coder hours, and keeping something going with a few improvements requires only a sliver of those.
dna_polymerase 6y ago
Yeah, nice story, but Google kills products without offering any alternative. There is no master plan at Google regarding non-search products. Just pure incompetency.

monadic2 6y ago

How does that make sense? On paper they just lose the revenue of the Fit without gaining any new revenue elsewhere. That’s just a loss. It takes some magical thinking to argue that these lost customers will move over to the more popular model, a qualitatively different car.

ummonk 6y ago
What I got from that comment is that they're supply constrained, and gain new revenue elsewhere by producing more of the HR-V.
- monadic2 6y ago
  Why would they think that demand of the HR-V is likely to increase if they remove the fit? I understand removing unprofitable lines, but if it’s making money why fix something that ain’t broken? If they’re worried about competing with themselves, they’ve blatantly told you as a customer the car you want is too desirable for you to have it. Wtf?
  - ytdytvhxgydvhh 6y ago
    They’re supply constrained on both Fit and HR-V. The factory is going all out, but building a new factory isn’t a short term thing. So they can build all of the more profitable HR-V and sell every one or they could mix in some less profitable Fits.
ytdytvhxgydvhh 6y ago
If you’re Honda and you’ve got a factory that can make 100000 cars a year, would you rather make 100000 cars that make $2000 profit? Or 50000 cars that bring $1000 profit and another 50000 cars that bring $2000 profit? If you’re Google and you can only find N top notch software engineers, do you want to put any of them on marginally profitable projects?
- monadic2 6y ago
  I mean, you still need to convince people to buy the cars to get any profit, so I'm not sure what your point is. >If you’re Google and you can only find N top notch software engineers, do you want to put any of them on marginally profitable projects? Presumably this depends on what kind of work is needed. I've never worked at a place where profit is correlated to engineering talent, including and especially at Google. Again, I'm not sure what point you're trying to make.

csharptwdec19 6y ago

It's possible that the Fit fell into a spot where it would be unprofitable under USMCA (The new trade agreement between US, Mexico, Canada.) Under the new agreement more 'value' of the vehicle (be it parts, or the cost of labor to assemble) has to be from within U/C/M to avoid being considered an 'import' and subject to additional tariffs.

Dylan16807 6y ago

But in the long term you'll hit saturation on the more popular model, so you should still invest in any model that clears some ROI bar. Especially when that car (or that google product) is already designed and in production! And an already-working piece of software is much easier to keep running than a car production line. It needs servers but Google has a nearly infinite supply of servers for sale. The constrained resource is coder hours, and keeping something going with a few improvements requires only a sliver of those.

dna_polymerase 6y ago

Yeah, nice story, but Google kills products without offering any alternative. There is no master plan at Google regarding non-search products. Just pure incompetency.