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I really don't have any expertise on these things but it sounds to me like there are some funky facts missing from this article. "Once in China, the cars, whic
by netcan 13y ago
I really don't have any expertise on these things but it sounds to me like there are some funky facts missing from this article.
"Once in China, the cars, which typically retail for $55,000 to $75,000 in the United States, can be resold for as much as three times those prices."
That doesn't add up, not without some more explaining. Maybe there are import quotas that these guys are using up & limiting the manufacturers ability to import into China. The auto industries tend to have the most thorough history of trade "regulation" and there are complicated vestiges of old import/export policies, WTO penalties & such. It can be hairy.
I get that this is the NYTimes blog, but this is where a journalist (or blogger, why not?) should be contacting neutral knowledgeable people. An economist and/or lawyer familiar with the auto industry trade stuff. Where's the meat?!
- genericuser 13y agoMy understanding from reading about the issue of car prices in China earlier when the Tesla story about its China price came up (http://www.teslamotors.com/blog/fair-price http://www.teslamotors.com/blog/fair-price) was that luxury car manufacturers have managed to create a market in china where they can sell their cars at largely marked up prices (relative to U.S. for instance) and profit from most of that price increase. These luxury cars being by definition a luxury good, fall into they type of luxury good known as a Veblen good, in which the exclusivity associated with the high price is part of what makes these cars desirable. While this is seen in most markets for these cars, apparently early auto manufacturers selling luxury cars in China decided to go for a higher price point in China than in other markets. This created a market where new manufacturers who entered would be forced to choose between selling their luxury cars at lower prices (relative to the established luxury cars) therefore less exclusive and less desirable (sometimes even considered of lower quality) or selling them at similar mark ups and making extra money.
- netcan 13y agoAs I said, I'm no expert. But, I doubt these price discrepancies can be fully explained in this way. Rolls Royces (a common example) is a common example, but these are pretty supply limited being hand built cars. A unique situation. I can't imagine that manufacturers genuinely get away with a >50% profit margin. It also doesn't explain why export is being limited (presumably from other countries, not just the US).