Brent P wrote:
> In article >, Michael Johnson, PE wrote:
>> Brent P wrote:
>>> In article >, Michael Johnson, PE wrote:
>>>
>>>>> Absence of a gun to your head is not the definition of a free market.
>>>
>>>> You're free NOT to pay the asking price.
>>> That price isn't being set by free market conditions.
>> Fact is you are free to purchase what you choose that is available in
>> the market. You are also free to start your own car company if you want
>> to compete or supply a product that doesn't currently exist. Whatever
>> point you are attempting to make here, I'm not seeing the relevance to
>> the topic at hand.
>
> And there might be life on Mars! Which is about as relevant to the topic
> at hand as your 'point' above.
>
> My point, is that this 'it's the free market' defense of dealer market up is
> not valid. It's not. It's anything but free market competition. If it
> were free market competition the cars wouldn't be going through dealer
> allotments. Dealers would actually compete with each other to make sales
> rather than just wait for suckers.

The market price of any Ford vehicle is virtually unaffected by dealer
allotments. The allotment system for popular vehicles is Ford's way of
rewarding certain dealers for their performance and not as a way of
controlling prices. The price is set by what the consumer is willing to
pay.

You are applying the free market definition to a very specific company
and a very narrow circumstance. You are not obliged to buy a GT500.
You have the ability to choose a Corvette, Mercedes, BMW or any other
car you choose as a substitute if you aren't willing to pay a dealer's
price. This is the free market, or supply and demand, forces at play
that really sets the price of a GT500. You need to take off your
blinders and see the entire playing field. Then you might see how
supply and demand, along with the dealer's, and Ford's, right to
maximize profits is determining the price of the GT500. This isn't a
rare case. It happens with nearly every item we purchase.

>>>> So, why blame the dealer for high prices? It is just as much the fault
>>>> of the buyer.
>
>>> That's why I called the buyers who paid it morons and idiots. Try to pay
>>> attention.
>
>> I am but you're rather hard to follow.
>
> Most everyone else seems to follow it.

Have you read all the posts in this thread?

>> What exactly is your problem
>> with the dealer if the buyer is ultimately responsible for high prices?
>
> My 'problem' is that people are calling this situation a result of 'free
> market' forces. It's not.

See above.

>>>> If Ford makes enough GT500s this will happen.
>
>>> Doesn't look like they are going to.
>
>> I doubt anyone knows the answer to this right now. Not even Ford.
>
> "Look like" isn't knowing the answer, it's a projection, a guess.

And just how do you know enough to even remotely use the term "looks
like"? I know I don't know enough to use it. All I know is what they
have stated.

>>>>>> And there will ultimately be a limited number of GT500s.
>
>>> Market forces are entirely different for a product that is in production
>>> vs. one declared collectable. Any auction house should be able to explain
>>> the difference. And yes, I don't think the vintage ones are worth a 100K.
>>> And once the baby boomers start dying off they won't be any more.
>
>> You're having a very hard time understanding the relationship between
>> supply and demand and their effects on pricing.
>
> I understand it very well thank you very much.

OK. If you say so.

>> When those baby boomers start dying what happens to demand? What
>> happens to supply? Then what happens to pricing? Get it now?
>
> I get it quite well. However that doesn't make 20K profit adders at
> dealerships the result of a free market.

See my first response above. I'm getting tired of explaining it. The
free market extends way beyond Ford and its dealer network.

>> The same thing is happening with the 2007 GT500. High demand for a
>> limited supply means higher prices.
>
> Have open ordering at all ford dealerships. Order until hitting the
> limiting production part. Guess what will happen? Prices will fall
> because people can then go to the dealer down the street that's willing
> to sell 150 at MSRP vs 1 at 25K over. The market isn't a free one at
> present.

And you are free to scour the country looking for a deal on a GT500 too.
What's the difference? The pricing for both vehicles are effected by
free market forces and the dealer's, and Ford's, right to maximize
profits. Just like it is with every other item you buy, such as toothpaste.

>> Whether it is GT500s, rare paintings, Nike shoes or gasoline the same
>> principle applies.
>
> But just it applying doesn't mean it's a 'free' market.

You have a real mental block on this.

>> What happens if a dealer never lowers the price and the car never sells?
>> Do you think he will sit on the car for 20 years or maybe forever? If
>> there is no buyer for the asking price it won't sell, period. The price
>> will be lowered until a buyer is found. The demand for GT500s will
>> fluctuate over time and so will the price.
>
> The population of morons with more money than sense is well distributed
> around the country to ensure that every dealership will be able to find
> one or two such people. The cars are on _allotment_ that means there's no
> real competition between dealers because a dealer cannot sell more than
> his allotment. It changes the dynamic entirely. It's not a free market
> situation, it's more like communist style rationing. Such rationing
> always in the end results in shortages and in many cases very high prices.

It's SUPPLY AND DEMAND!!! Dealers don't have to compete right now
because the demand is far outstripping the supply!!! Allotment has
nothing to do with it. Communist style rationing?!?!? You are way off
the reservation now. Maybe that would be true if the only choice we had
was buying GT500s from Ford.

> If ford wasn't rationing the production to the dealers, dealers would
> sell the car freely. Dealer A would try to make money on volume, dealer B
> might try to sell a couple at way over sticker. There would be
> competition. Orders could start flooding in and Ford might decide they
> should dedicate more mustang production to this higher profit margin
> version. Instead ford rations, and we get something that is the result of
> central planning.
>
> Grasping the difference now?

You need to stop looking at this in a microcosm. The free market goes
way beyond Ford and its network of dealers. You are free to buy what
ever car make and model you choose and there are a multitude to choose
from. That is how the free market, along with Ford's and the dealer's
right to make a profit, is setting the price of the GT500.

Are you grasping the concept now?

>>>> EVERY dealer does what Ford is doing when they have a super hot limited
>>>> production vehicle. It is what every business does when they have a
>>>> chance to maximize profits. I do it every chance I get.
>
>>> So you screw over every ignorant customer that walks in your door? Where
>>> do you draw the line on maximizing profits? Where's the line? Or is there
>>> even a line?
>
>> Are you going to turn down your next raise?
>
> My salary could double and my employer will still be getting a bargin.

That is YOUR opinion. Others may not agree. Just like you don't agree
with the value dealers put on a GT500. I guess you aren't going to let
your employer reduce your salary if he thinks you are overpaid?

>> If not then YOU are maximizing your profits.
>
> You seem to like asking questions but not answering them.

Sometimes a question is really an answer.

>> Why chastise Ford, or any business for that matter, that is doing the
>> same thing you are?
>
> I am chastising the members of this group who think that this is a free
> market situation because they don't have the brains to realize that
> rationing isn't free market. And if you ask me, maximizing profit would
> be selling this car at MSRP to everyone who will buy it at this price.
> Maximum profit isn't at maximum price. It's a clever balance of volume
> and price and to the competition. But obviously your mind can't grasp it
> any deeper than the simplistic get more per unit now mentality.

As I stated above, you need to see the broad picture to understand the
free market is at play here. Ford has every right to operate in
whatever way they think is best. They also have every right to go
bankrupt if they choose wrong. It happens in a free market. How do you
know they are wrong with their handling of the GT500? I don't have
access to their accounting records. Do you?

>> Your position seems a
>> little hypocritical to me. It is the dealer's right to apply any
>> marketing strategy they choose to maximize profits. If their methods
>> cost them buyers then they will see a drop in demand for their products.
>
> Good for them, and if this was a free market situation things would be
> different. Instead we are dealing with a rationed product.

You do realize there is far more to a free market than just Ford's
internal functions?

>> The fact is that the overwhelming majority of car buyers could care
>> less if a given dealer sold a GT500 to some idiot for $100k. All they
>> care about is what Ford is charging THEM.
>
> The overwhelming majority of car buyers wouldn't give a rats ass about
> anything a ford dealer has or what it was priced at.... You seem to enjoy
> introducing things that have about as much relevance as what killed the
> dinosaurs.

Didn't you say that Ford's way of handling the GT500 would alienate
buyers and their loyal customer base? In case you forgot here's what
you typed previously:

"I would weigh permantly ****ing off customers and getting customers to
look at vehicles from other manufacturers into the equation. I would
consider those long term losses to be more important than the short term
gain. But hey, I am not chairman of Ford as it loses billions every
quarter. The short term thinking seems to be working out well for them
don't you think?"

Maybe that was someone else.

>>> If you are always seeking to maximize profits now you are going to need a
>>> constant supply of new customers to make up for the ones who later
>>> learned better or felt you were trying to screw them and walked out the
>>> door and bought from someone else. Maximizing profits in the short term
>>> carries a great deal of risk for the long term. Unlike you apparently, I
>>> would consider that.
>
>> There is one huge fault in your logic here. You are assuming every
>> buyer is dissatisfied with the transaction. Do you think the guy that
>> paid $60k for his 2007 GT500 is ****ed off at Ford? I bet he is driving
>> around with a big grin on his face. I bet most people that buy a new
>> car will say they paid a fair price. Why would they buy a new vehicle
>> otherwise? There are too many choices for the consumer in the car/truck
>> market for someone to feel they were overcharged. Once again, supply
>> and demand forces will keep prices in check.
>
> So it's ok to screw people if they don't know any better in your view.
> Glad I had that right. When the buyer wakes up when the interior wears
> like a V6 mustang's he's going to think he got screwed.... But if you
> understood that then you wouldn't have replied as above.

The buyer has no obligation to educate himself before heading out to a
dealer to purchase a car? Nothing is keeping him from buying a Mercedes
if he is concerned about the wear of the interior of a GT500. Just how
is Ford, or a dealer, "screwing" any buyer of a GT500 when it is their
choice to buy the car? I'm sure the first time a GT500 buyer plants the
accelerator to the floor he will realize just why he paid that price
premium. Last thing on his mind will be, "I wonder how well this
interior will wear?"

>>>>> Yes, capitalism in practice is rarely free market. It's about
>>>>> manipulating markets and creating monopolies really.
>
>>>> It's about beating your competition and making your products desirable.
>
>>> The beating your competition part is part I was refering to. For example,
>>> microsoft's practices.
>
>> If you don't like Microsoft then buy an Apple or use Linux. If
>> Microsoft ****es off enough people then they will loose market share.
>> In the end, it is the consumer that makes or breaks Microsoft or any
>> other company.
>
> You don't get it.

This, evidently, is where you and I have much in common.

> Microsoft to PC builder: If you offer Linux we won't sell windows to you
> and you'll lose most of your business.

Wouldn't have anything to do with the consumer preferring Windows as an
operating system? Besides Microsoft got their hands slapped for this
little escapade. How does this relate to Ford and their dealers selling
GT500s? I don't see them setting up a sports car monopoly.

> Get it now? Probably not. You probably consider that an ethical business
> practice to maximize profit.

Don't forget to donate that next raise you get to the Red Cross. We
wouldn't want to think you are greedy now, would we?