MISH'S
Global Economic
Trend Analysis

Recent Posts

Monday, August 03, 2015 12:49 AM


Bad Deal Math: I have a Product, But Please Don't Buy It


How often do you hear a car manufacturer (or any other manufacturer) tell people to "not" buy their product because they lose money if you do?

I highly suspect this is nothing more than a purposely calculated publicity stunt, but please consider California Has a Plan to End the Auto Industry as We Know It.

Sergio Marchionne had a funny thing to say about the $32,500 battery-powered Fiat 500e that his company markets in California as “eco-chic.” “I hope you don’t buy it,” he told his audience at a think tank in Washington in May 2014. He said he loses $14,000 on every 500e he sells and only produces the cars because state rules re­quire it.

So who’s forcing Marchionne and all the other major automakers to sell mostly money-losing electric vehicles? More than any other person, it’s Mary Nichols. She’s run the California Air Resources Board since 2007, championing the state’s zero-emission-vehicle quotas and backing Pres­ident Barack Obama’s national mandate to double average fuel economy to 55 miles per gallon by 2025. She was chairman of the state air regulator once before, a generation ago, and cleaning up the famously smoggy Los Angeles skies is just one accomplish­ment in a four-decade career.
Spare Me the Sap

Automakers could just as easily price this crap at a point where they make a profit. They don't, because they want the publicity.

Here's the bottom line: Companies don't beg consumers to "not buy" a line of their products, unless they think favorable publicity will make up losses elsewhere.

Moreover, I highly doubt companies (counting tax breaks) are losing what they claim they are. Can we see full cost accounting, please?

Bad Deal Math

Even if this is a bad deal for the automakers, please don't assume it's a good deal for consumers.

Government adds inefficiencies in everything it does. It's quite likely that energy mandates are a lose-lose proposition for everyone involved.

  • Corporations Lose Money on Product Sold
  • Consumers Overpay vs. Gasoline Pump Savings 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Last 10 Posts

Search This Blog

Loading...

Copyright 2009 Mike Shedlock. All Rights Reserved.
View My Stats