American vs foreign cars

[Rincewind]

Well, apparently this week, GM finally lost their #1 spot in the US car market. I'm quite surprised it didn't happen earlier, the US car companies have had the collective brains of... well, probably President Bush. They've basically refused to innovate, unless you call "Hey, wow, I can make a car get less than 10 mpg!" an innovation, and the cars have consistently done much worse than the foreign cars in Consumer Reports' testing on how often they break down. So apparently the US auto industry is surprised that if you make crap for 20 years people stop buying your stuff. Then again, people haven't caught on with Garfield, so you never know.
News article below. My post edited for spelling.

articles.moneycentral.msn.com/Investing/Extra/HellFreezesOverGMFadestoNo2.aspx?page=1

[Dmitri]

well, as a former car salesman (for a foriegn manufacturer), I can feel the pain of GM and Ford and Chrysler. I mean, when gas is a buck a gallon, who cares if the hulkin SUV gets 2.5 miles per gallon? and who bought em up like candy back then? and then when gas spikes to realistic market prices, who crows that GM et al should make more efficient autos when we have been demanding GMC Yukons and Dodge Durangos and Chevy Suburbans and all the other monster vehicles for years?

CEOs simply solve a math problem, especially in an oligopoly like the car biz. Where marginal revenue=marginal cost, they produce that quantity. Since demand is usually above that, you take price out to D, and that is how you determine price and quantity. It's math - nothing else, plain and simple.

The foriegn market has simply been more flexible and responsive to shifts in consumer tastes and preferences.

Lastly, from an insider perspective, always be wary of the Consumer Reports guides... they are usually wildly inaccurate, and often paid propeganda pieces for certain manufacturers who advertise in their publications. Take it from a former salesman - a Toyota is no less likely to break down than anything else. They simply spend more in advertising, and often the breakdowns are not warranty issues (which is often what CR reports on). Anyway, before this turns into a rant about the BS that is Consumer Reports, adieu...

[grond]

Gas is nowhere near a realistic market price. Between subsidies and trade agreements, we're still paying about half. Still, I'll bet most of that increase in price isn't going toward relieving any of the subsidies. How many people are CEO of any American fuel distribution companies? At least we know where some of that Government funded money is probably ending up, now if we could figure out where it comes from . . .

Flexible and responsive. . . . m m mm

<Shakes head from probably inappropriate daydream>

Yeah, I blame America for that, blame Canada was already copyrighted. It's the bizarre concept that an SUV is safer than other cars. Well, it doesn't beat a flatbed tow truck. Just ask that major league baseball guy from the Cubs? and he'll tell you. . . Ohhh, hope I didn't just offend any Cubs fans (soemone please tell me I got the right team)
It seems to be that, for all of their weight and improved 4 wheel drive, the SUVs of the world still fail to account for the one flaw in every car's safety . . . ness, that jackass who doesn't check his mirrors before pulling onto the highway, or turning a corner, or stopping short, or pulling out of a space, or crossing 4 lanes of traffic while talking on a cell phone and eating a bowl of cereal (we all know it, but I'm going to say it, I'm talking about Jonny). And when that guy hits the road, if there's an SUV around (regardless of the driver) I'll bet it's at least twice as likely to kill someone. Tell me if I'm wrong, I'll feel a lot better the next time an SUV driver does one of the above to me. I tail gated the last one for a mile with my horn on, and I'm not too sorry if that was you.
In closing, SUVs may be safer, but only for the driver of one. This message was brought to you by an angry man who just about got pancaked by one 3 hours ago (running a do not turn on red while looking the other way for cops) and I'm pretty FUC*ING tired of that happening 2-6 times a week, in front of my house.

[Dmitri]

actually, the reason that gasoline is so expensive in other places in the world is that they tax it into oblivion. a "sin tax" because of the inelasticity of the demand for petrol.

right now the price for wholesale is right around 2.35-2.45 per gallon, and the average gas tax in the US is .50. this brings us right to the market price being paid at the pump. consumers pay teh taxes because the demand curve for gasoline is an almost totally vertical line. there is little response in quantity demanded when there is any change in price. it's not like if gas dropped to .50 per gallon i'd all of a sudden drive cross country six times...

anyway, the point though is the same - gasoline prices are not too high, nor should we regulate them downward. to do so would be disasterous to the economy, and simply create a shortage, reduce consumer and producer surplus, and increase deadweight loss (loss in overall social welfare).