On Mon, 10 Nov 2014 07:50:59 -0600, dpb wrote:

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

...

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.
But anyone who has spent any time immersed in the automotive business
KNOWS certain vehicles are always sold at a loss - certain very
popular models have never earned the company a cent, and others lost
money for several years before becoming "mainstream" and making money.

For years, Toyota lost money on every Hilux sold in North America, but
they sold them for what they could get for them to allow them to
import more Celicas, Coronas, and Corollas - models they could sell
all they could get and more.

The same has happened with virtually every other manufacturer/dealer
at one point or another.