(Sorry about that blank message!) "Gustavo Lacerda" <[EMAIL PROTECTED]> wrote: > > Claim: "auto manufacturers won't make cars that last long (say, 20 years of > > reliable operation) because they would make less money that way". > > > > Your opinion? > >
Krist van Besien <[EMAIL PROTECTED]> wrote: > I have to disagree with you on this one. When I was a kid Volvo used to > advertise with the fact that on average their cars lasted well over 20 years. > Since then cars have only become more reliable, even though not all cars are > built to last 20 years, there are brands like Volvo, Mercedes and even Peugot > that have a reputation for longevity. I cannot remember anyone I know buying > a new car because their old one broke down beyond repair, which gives me the > impression that car manufacturers do build cars that last as long, if not > longer, as consumers want them to last. > The fact that people (in Europe) replace their car long before it is worn > out says enough... I have to disagree also. Properly maintained, many cars *do* last 20 years. I learned to drive (at age 16) on a car (a Pontiac Catalina) that was five years older than I was; it ended up lasting 23 years and going 230,000+ miles. (Granted in the 23rd year it wasn't 100% "reliable" and most of those miles were put on in the first 15 years...) I now have a 1991 Pontiac Sunbird with almost 110,000 miles that is still reliable, and I have no plans to replace it. I know my two data points don't prove anything, but I know of enough other cases that I'm confident that 20-year cars are not that unusual, at least in the U.S. Based on my highly informal data (i.e., from personal/family experience, plus I like to look at other cars as I drive, and note which ones appear old), I have the impression that GMs and BMWs last longer than, say, Fords and Nissans. (Moral: If you start a car company, name it with initials! ;-) I think it would be interesting to get data on whether cars with one owner last longer than cars with multiple owners. People like me who keep cars until they wear out tend to have 20-year cars; people who lease, trade in, or re-sell obviously don't. The market value of a 15-year-old car is nearly zero even though if I have owned a car for 15 years I think it still has 5 years left -- but a new car one plans to keep for five years has a very high market value. I think there must be some sort of information story, along the lines of Akerlof's "Market for Lemons." In Akerlof's model, there are two types of used cars, "high-quality: and "low-quality." Since quality is unobservable to the buyer but known to the seller, only low-quality used cars are actually sold. Now imagine that there are two types of car CONSUMERS, "long-term" and "short-term" (based on preferences, e.g., for the latest gadgets or for fashion). Everyone knows (from Akerlof) that you can't sell a used car for a high price since you can't prove to the buyer it's high quality; all used cars fetch the "low-quality" price. Now, quality of a used car depends to a large degree on how well it's maintained. So, "short-term" owners (i.e. those who plan to sell their cars eventually) don't put as much effort/expense into taking care of them, so when it's time to sell, the car really is a low-quality used car, and it's rational to sell it. On the other hand, "long-term" owners plan in advance to keep their cars for a long time, so they take good care of them. By the time the car is (say) 5+ years old, it's of higher quality than cars of the same age being sold by short-term owners, but the long-term owner can't prove it and get the high-quality price, so it's rational to keep the car. Maybe we should call this "planned rationality." ;-) --Robert Book University of Chicago ------------------------------------------------------------------------ First Law of Work: If you can't get your work done in the first 24 hours, work nights. ------------------------------------------------------------------------
