RinconVTR wrote:
mich800 wrote:
RinconVTR wrote:
High volume is suppose to equal lower price. Yet this simple law of economics has no place in the truck and SUV business apparently! In this category, high volume = higher prices.
Pick-up trucks in particular are a hot trend over the last few years that shows no sign of declining and prices continue to increase significantly.
OEM's are raking in the cash on these high margin sales...make no mistake about it.
And there is no stopping the trend...until fuel hits $4-5 per gallon.
You are confusing supply with demand. High demand yields higher prices. High supply without demand will yield lower prices.
No confusion. Just a different "law" I was referring to.
There's not enough demand to drive prices. And there is plenty of supply to keep up with demand.
Generally higher volume production quanties = lower costs.
What you are describing is a downward sloping supply curve. Yes in some industries like computers this is true. It does not apply in the automotive industry. In the automotive industry the input prices are generally increasing. Of course tooling and fixed costs are amortized over a larger quantity but variable costs do increase.
"There's not enough demand to drive prices. And there is plenty of supply to keep up with demand. "
The OEM's are simply meeting the demand at their price point but would gladly supply more if there was demand. If demand falls they will supply fewer at a lower price.
