Economic Darwinism
On my normal walk to the grocery store, I pass by a car dealership--the local Buick-Pontiac-GMC, with a collection of shiny SUVs in the front lot.
Recently, I've wondered to myself how they manage to stay in business, given the state of the economy, and the rising price of gasoline. As well as the fact that whenever I walk by, I don't see any customers inside. When I glanced at what was on their lot, I inwardly thought, "I can't say that I'd ever consider buying anything there," and I imagine many of my cohort think similarly. I remember seeing their various financing and incentive packages on their windows, and thinking, "Um, still nope. Sorry."
As an aside, I was told once that the monthly sales of SUVs closely track the price of gas. Um, monthly? Holy crap... does the American consumer have the memory of a goldfish? (actually, some claim to debunk the goldfish 30-second memory truism). "Oh, gas is cheap now, it must be ok to buy something with crappy mileage." Important note: YOU WILL PROBABLY OWN YOUR VEHICLE FOR MORE THAN ONE MONTH. Ahem. Yes, yes, I know--vehicle purchases are often influenced by many subtle, non-logical hindbrain signals--but still, you'd think some logic might wrest control away when spending tens of thousands of dollars.
Anyway, on a walk to the supermarket last weekend, I saw this on the dealership's door.
Ah well. Just one small local economic indicator.
posted by Bats @ 10:06 AM
7 comments
7 Comments:
"Holy crap... does the American consumer have the memory of a goldfish?"
Dude, you're asking this in the middle of the subprime crisis, which was, in part, caused by the American consumer saying "Wait, when you said rates might go up from their lowest point in decades, you meant it?"
Well, yes: it's an economic indicator. But really, how many independent bookstores are there in Harvard Square, anymore?
[Was it an NYT Magazine article not too long ago about how there were just too goddamn car dealerships to begin with?]
Regardless, in the age of the 'net, the number of people who are going to make their living selling expensive things retail to consumers is gonna drop a lot.
On a parallel note, an interesting development this year in this part of Ontario is that I have never seen so many "for sale by owner" signs on houses in the seven years we've lived here. And it's not some "fire sale" type thing: K/W real estate is doing just fine. People are just getting wise to how little value is added by the people who provide friction on large purchases.
(This doesn't change the obvious fact that, well, I ain't gonna be buying an SUV anytime soon. When we replace Harold, my expectation is it'll be a Matrix or yet-another-Corolla.)
(Oh, and another rant: why the hell is the car made at my local car plant called an "import", when Detroit is no more domestic than is Nagoya?)
"Unforseen market conditions"? My 12 year old stepdaughter could have called that one years ago. Jeez. Although I guess it's not their fault that GM gave them crap to sell.
Car dealerships are like every other kind of franchise business in that they're usually set up by someone who wants or needs all the thinking done by someone in the Mother Ship. And I doubt the Mother Ship was going to tell this guy which way the wind was blowign. --Omri
If you need Mother Ship to tell you "gas prices are never, ever going to drop" and "SUVs will lose their market share like you'll be losing your hair soon" then I don't see how you get enough money to run a dealership in the first place.
If you don't know how drooling morons can get financing in large amounts for unviable businesses, well, actually, I don't know HOW either, but I know they do. --Omri
Having run a business myself, now that you mention it, you're right. It's a *lot* easier to get large chunks of dough to run a business than it is to get small ones, provided you invest in "infrastructure" - capital assets. Buildings, vehicles, etc. Not so much if you need it for non-capital assets.
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