So I'm taking an economics class and we were going over a 'supply and demand' concept. Basically the way I understand it, the more people want something, the higher the price goes, until more of that thing is made and sold, and then the price falls. It's a strict law of nature that if less people want something the price will go down, and if more people want something the price goes up.
I'm thinking about it, and I'm thinking this could be applied to the new car market. Everyone bitches that new cars undergo horrible loss in value when you buy them, right? A 30k car could turn into a 20k car the second it leaves the dealer's lot. That's a huge amount of money just totally vanished and removed from the economy forever, and it's the reason why it's a better idea to always buy used.
What if everyone collectively decided to not buy cars for a few months? By law the price of new cars will go down, and eventually it'll get to the point where a new car could be at the price of a used car, and at that point everyone could just buy the new cars at used prices and avoid the depreciation hit. This way, everyone saves some money and it's not removed from the economy. Any thoughts?
>That's a huge amount of money just totally vanished and removed from the economy forever take many more economics classes. The money isn't gone or vanished, it has been transferred to the dealer, who then transfers it to employees, government, manufacturer, advertisers etc.
Carter Rogers
Car manufactures crush unsold inventory before they would sell them super cheap. Selling them super cheap would flood and they would hardly make anything.
The moment when people collectively decide to start buying cars again the demand would be very high and the prices would increase instantly. Try thinking it through.
Leo Cox
> It's a strict law of nature that if less people want something the price will go down, and if more people want something the price goes up.
Except that's patently untrue. The company making the item has to break even somehow, so at some point they start charging more for items that are less popular, especially things that cost lots to build such as cars. That is why supercars are expensive -- they are limited in number and the amount of actual able buyers are limited, so to actually make their money back, a car company must charge a premium.
Jason Sanchez
Supercars are high demand and limited production.
John Ortiz
>we were going over a 'supply and demand' concept. That type of pricing doesn't exist where there is price fixing.
That type of pricing model is not accurate where advertising or price competition is prevented by guilds or organizations such as the lawyer bar association or doctors medical association.
OPEC was formed to keep petroleum prices higher and reduce price competition between suppliers.
Mason Myers
My thought is that you need to wait until you learn about cartels which describes the exact scenario that you are talking about.
Then wait until you learn game theory which will explain why it's not possible for large groups of consumers.
Cameron Harris
>By law the price of new cars will go down, and eventually it'll get to the point where a new car could be at the price of a used car, and at that point everyone could just buy the new cars at used prices and avoid the depreciation hit. do you know what an investment is?
Owen Thomas
there are new cars you can buy that don't get hit with depreciation, assuming you keep it in good shape
some examples
>porsche cayman gt4 >focus rs >bmw M2 >civic type R (most likely) >porsche 911R
Even in the used car market you can get hit with depreciation if you're a bitch and make stupid purchasing choices.
Jaxson Morris
>civic type R (most likely) old CTRs cost peanuts. i don't know why this new one will be any different
Caleb Morgan
>i don't know why this new one will be any different
First one in America, and holds fastest hurrburgering time for fwd cars.
I can see why it wouldn't hold its value in places outside of America though.
Owen Walker
you forgot the cost of making the car is set and won't change. GM doesn't make that much off each car it sells. The price really won't get much lower than it is or making cars wouldn't be profitable.
Parker Hill
>So I'm taking an economics class and we were going over a 'supply and demand' concept. Basically the way I understand it, the more people want something, the higher the price goes, until more of that thing is made and sold, and then the price falls.
not a car, that's for sure. a car is a depreciating asset.
Easton Scott
He's right you know. If you bought a BMW 1 Series M your car is probably worth almost as much as you paid for it. You have to keep an eye out for good cars. The ones the company doesn't want to make for economic reasons but does make to satisfy company culture and purists.
Isaiah Scott
Please tell me this is bait.
Landon Morris
>fastest hurrburgering time for fwd cars. That'll have precisely zero effect on it's depreciation >First one in America This will actually likely cause higher sales and higher depreciation.
Bentley Taylor
These cars can also be money pits that won't rise back to their original value for decades
Isaac Richardson
A dealer told me they send all unsold cars to developing countries.
