Re: long-lasting cars
On Saturday 30 March 2002 08:11, you wrote: Is there a point in the life span of a car good for 20 years that the owner would rather trade in now than lose what value they have left? It all depends. The moment a car is worth less to the owner then it is on the (used car) market he trades in. THis can be subjective. A friend of mine is an absolute fan of the Renault 19, which hasn't been produced in about 15 years. She'll drive it till it falls apart (which it fortunately won't do for a long time...). For her the particular make and type has a high subjective value. I myself drive a car that isn't two years old and I am already looking for a replacement. But then I place value in owning the latest gadgets :-) To pose another question: What effect would long lasting cars have on the used car market? The last couple of years we've seen the quality of cars improve considerably here in Europe. No car manufacturer would think of offering 12 years of waranty against rust in 1970. So longer lasting cars are being build. OTOH the average age of cars on the roads here in Northwest Europe has dropped. We have become wealthier and trade in our cars sooner. Where do all these used cars go? Eastern Europe mostly. Just spend an afternoon at a used car market in Germany and you'll hear more Polish then German... The Polish gouvernement has recenlty imposed taxes on imported second hand cars. The average Pole seems to prefer an 15 yo Mercedes over a brand new FSO. I can understand why. Krist
Re: long-lasting cars
mine is twenty two years old and still run smothly!!! - Original Message - From: Gustavo Lacerda (from work) [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, March 28, 2002 3:06 PM Subject: long-lasting cars 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? Is the technology for reliable vehicles feasible for mass production? Would there be enough demand for such vehicles (i.e. the profit margin per vehicle is big enough to offset the loss due to fewer sales)? Gustavo
RE: long-lasting cars
Sure, the technology exists... HOWEVER, would YOU buy one? It would cost a great deal, after all, this is only one of two-three cars that you'll ever HAVE TO buy, so the car will cost more, because of materials and design, and because the manufacturer will lose many repeat customers. Further, look at the car styles of the 1980's, do you want to be driving a Yugo or a Cabriolet now? Think of the styles of the 1950's would you have wanted to drive one in the 1970's? So, would consumers really want to buy one? In short, you invest in a house, do you want to invest in a car? -Original Message- From: Gustavo Lacerda (from work) [mailto:[EMAIL PROTECTED]] Sent: Thursday, March 28, 2002 10:06 AM To: [EMAIL PROTECTED] Subject: long-lasting cars 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? Is the technology for reliable vehicles feasible for mass production? Would there be enough demand for such vehicles (i.e. the profit margin per vehicle is big enough to offset the loss due to fewer sales)? Gustavo
Re: long-lasting cars
Gustavo: I think the technology is available to make cars last longer and that manufacturers do not make them last longer because they would make lower profits. Who would want a car that would last 20 years? Long before it wore out, various components in it would be obsolete or out of date with regulations. (It would also go out of fashion, too.) This is the problem with communications and other satellites that have long lives. The owners often choose to replace them long before they wear out because such better models have become avialable in the interim. Yours, Asa Janney Gustavo Lacerda (from work) 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? Is the technology for reliable vehicles feasible for mass production? Would there be enough demand for such vehicles (i.e. the profit margin per vehicle is big enough to offset the loss due to fewer sales)? Gustavo -- If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away. -- Henry David Thoreau, Walden
Re: long-lasting cars
Pinczewski-Lee, Joe (LRC) wrote: . . . look at the car styles of the 1980's, do you want to be driving a Yugo or a Cabriolet now? Think of the styles of the 1950's would you have wanted to drive one in the 1970's? . . . That strikes me as a bit circular. The more ephemeral a product is, the more it will be designed for novelty; a car designed to last twenty years will, I imagine, be styled more conservatively than one designed to last four years. -- Anton Sherwood, http://www.ogre.nu/
Re: long-lasting cars
Gustavo wrote Let's assume for a minute that: (A1) It costs the manufacturer the same $8 000 to produce 1 long-lived car as it costs them to produce 1 short-lived car. (A2)...Since the manufacturers' profit per unit is more or less proportional to the cost of production (call this assumption A3), (P1) when production becomes very cheap, the manufacturers' profits can get smaller, even if the number of sales is increasedDoes this make sense? --- No, it doesn't. Consider first the easier case of competition. In a competitive situation, as the auto market surely is, an auto maker with access to such technology would certainly use it to get a jump on the competition and grab market share. The fact that the long run implications of this would be to reduce total auto maker revenues is irrelevant in a competitive situation (and a common occurence). Now consider the monopoly situation. At first this seems like a better candidate but it isn't for the reasons given by Landsburg in John Hull's post. Think about it this way. Suppose that all sales are up-front so you can either buy 1 long lived car today which will last 20 years or you can buy 2 short lived cars today each of which will last 10 years (the second car will be in storage for the first 10 years). Even assume that consumers are indifferent between these two purchases - say they are willing to pay $20,000 either way. It's still the case that profits are much higher selling the long lived car = 20,000-8,000=12,000 rather than the two short lived cars =20,000-16,000=4,000. Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
Re: long-lasting cars
--- Gustavo Lacerda (from work) [EMAIL PROTECTED] wrote: By (P1), producing long-lived cars could result in smaller profits (this would happen in the form of fewer sales). Thus the interests of the manufacturer could be in opposition to the interests of the consumer (this reluctance to change production would be held up by collusion with the other manufacturers). Does this make sense? No. There would be a profit opportunity for a company to make long-duration cars, and eventually only those would be produced. It is technically possible to make cars that deteriorate in one year, but we don't see these in the market today. Fred Foldvary = [EMAIL PROTECTED] __ Do You Yahoo!? Yahoo! Movies - coverage of the 74th Academy Awards® http://movies.yahoo.com/
Re: long-lasting cars
Is there any link between aircraft manufacturing and car manufacturing concerning the life of the product.? Cars and aircraft can be made to last 20 or more years, but they require constant repairs. Any car can last 20 or more years, you just have to repair those parts that break. A car that has hassle free parts for 20 years is going to cost quite a bit more. Should this car that lasts 20 years be hassle free. If so, then what kind of technology is going to create a repair free car for 20 years? Seon.
Re: long-lasting cars
I suspect the problem is a market externality taken advantage of by advertisers. Fashionable identification increasing status. When cars are sold as sexy an old one just says dirty old man. This was most clearly seen in cigarettes. I have frequently overheard people judging others by the brand they smoked. People have been killed for their Nikes.Marketing thrives on repackaging. A lot of what is bought is not the car but brand identity. Its hard work proving you are a go getter, why bother when all you have to do is drive the right brand of car. Fred Foldvary [EMAIL PROTECTED] wrote: --- "Gustavo Lacerda (from work)" <[EMAIL PROTECTED]>wrote: By (P1), producing long-lived cars could result in smalller profits (this would happen in the form of fewer sales). Thus the interests of the manufacturer could be in opposition to the interests of the consumer (this reluctance to change production would be held up by collusion with the other manufacturers). Does this make sense?No. There would be a profit opportunity for a company to make long-durationcars, and eventually only those would be produced.It is technically possible to make cars that deteriorate in one year, but wedon't see these in the market today.Fred Foldvary =[EMAIL PROTECTED]__Do You Yahoo!?Yahoo! Movies - coverage of the 74th Academy Awards®http://movies.yahoo.com/ SOLD.com.au - 1,000s of Bargains!
