It's symptom of the same disease infecting America:
Maximizing Profit
Why sell a $20,000 car and make $5000 profit when I can sell a $60,000 car and make $15,000 profit? The goal isn't to provide the best product for consumers. The goal is to provide shareholder value.
Also, with mergers and a high cost to enter the market, we have fewer choices than ever, and if anyone makes a competing product overseas that is better, we tariff or ban it before it can hit the market. All in the name of "protecting jobs", but it's really about protecting profits.
Tesla did exactly this. They had the S with high profit margins. But that wasn’t to return anything to shareholders, it was to get enough cash to do the next car. Even the 3 initially sold only in high-trim, high-margin configurations to bring in the cash to keep the company going since they almost went broke in the ramp up.
Ford, Chevy, Honda, Toyota aren't just starting out. They can definitely take lower margins to offer more affordability. But they wont because shareholders
It does backfire tho. German car company’s did the same and now they can’t sell cars internationally and get outcompeted by China. Give it 5-10 more years and they sell 20% of what they used to. Somethings you maximize profits too much and you lose your customers.
Oh, I definitely see this happening to the US. Instead of making better cars to compete with China, the government is blocking them from the market. Soon even our closest trading partners like Canada and Mexico will be buying chinese cars instead of from the US automakers.
You're exactly right, this is why all the US Auto Makers are pushing SUVs and Pick Ups that cost 60k-100k and killed off the small economy cars, Toyota, Honda and Hyundai proves you can have success selling small cheap cars but the US companies don't care they rather make more PROFIT
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u/Aurdon 5h ago
It's symptom of the same disease infecting America:
Maximizing Profit
Why sell a $20,000 car and make $5000 profit when I can sell a $60,000 car and make $15,000 profit? The goal isn't to provide the best product for consumers. The goal is to provide shareholder value.
Also, with mergers and a high cost to enter the market, we have fewer choices than ever, and if anyone makes a competing product overseas that is better, we tariff or ban it before it can hit the market. All in the name of "protecting jobs", but it's really about protecting profits.