On 11/9/2014 6:00 PM, dpb wrote:
On 11/09/2014 5:34 PM, SMS wrote:
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...

Certainly if the price structure is not reflective of the cost of
producing the product or service they won't last long...

But they do last. The only reason the big 3 were producing small cars
was because of government requirements that their fleet MPG be at a
certain level. They would much rather have produced only high margin,
high profit, low MPG models. They set their small car prices at market
prices, and lost money on them in order to increase the fleet mpg.

One last comment on your pricing naivete then I'll mark 'Ignore Thread'
before letting this inanity continue further...

Even if they did purposely price a portion of the fleet below cost, (and
I'm certainly not at this point willing to concede that was really so)
it's still the overall cost/revenue for the entire company that's the
significant number. You can think of the loss-leader car as the N throw
away at Costco--it's in their overall cost structure just as the two
bookshelves were in the revised expense account the colleague
resubmitted--it was covered up by using per diem rates instead of
actuals to the point of making up the difference and such. Again, it's
the overall that matters, not each individual piece necessarily.

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