Hi folks,
When I first read Jim Mateja's column "Discounts demanded even on hybrids" in the Chicago Tribune business section, chicagotribute.com, my first impression was this didn't make a lick of sense:
""Dealers are getting hammered by consumers asking: `What's the incentive?' even though only 32 percent of all Toyota dealers have a Prius hybrid in stock, and dealers who do have only a four-day supply," he says. (A 60-day supply is considered normal in the industry.)"
A "four-day supply" pretty much says the dealer can decline an offer and wait for the next buyer. For this to be the case, we have to suspend belief in the laws of supply and demand. But then it is the end of the month and payroll and mortgage payments will soon be due.
The only thing that makes sense is they may be discounting a loaded "demo" that now has a couple of hundred miles on the odometer. The end of the model year is coming up and the dealer knows their replacement "demo" is in the pipe. What this suggests is 'timing.' Sad to say, e-mail requests to find the discount dealers have not been answered.
Serious price relief won't happen until the Kentucky Camry hybrid plant comes online. But already the Camry and high-end hybrids are giving the Prius a lot of relief. The real test will be when the supply catches up and more than 32% of the dealers actually have inventory and that inventory is more than a four-day supply.
If it is a trend, it couldn't come at a better time as the Toyota tax credits come to an end. But Occum's razor offers a simpler explanation:
"
U.S. Economy Cools As Consumers Pull BackBy Nell Henderson
Washington Post Staff Writer
Saturday, July 29, 2006; Page D01
The U.S. economy slowed sharply in the three months ended in June, expanding at less than half its pace earlier this year, as consumers and businesses hunkered down in response to climbing inflation and interest rates.
Consumers spent more on gasoline while pulling back on purchases of houses, automobiles and many other items. . . . "
http://www.washingtonpost.com/wp-dyn...072800408.html
We are already aware of the non-hybrid discounts. What is new is the possibility that even hybrids are subject to the economic slowdown. But that reminds me of the old joke about the two guys who went lion hunting.
They'd suffered a gastric problem and leaning their rifles against a tree, were seeking relief when suddenly they were surprised by a lion that jumped out of the bushes. As they were running, one turned to the other and said, "Why are we running? Man can not out run a lion." His friend answered, "I only have to you run you."
Bob Wilson
Violation of Supply and Demand?
