Toyota Products, Services, and Prices

A new car is much more expensive, but an old car is less expensive and can easily be purchased even with low credit score in auction. When you have a new car, you will be in control of a situation. Investing in a new car is also a wise decision. The owner of a new car might incur a higher initial cost, but benefit from the investment will justify the cost. If you decide that you want to buy a car, you have a different choice to make: Should you buy new or used car?

This means that the cross elasticity of demand for new cars would be positive (Slogan: 2009:69). However, if people find it more convenient to use public transport due to a reduction in price, then there will be a fall in demand for new cars leading to a negative cross elasticity of demand for new cars. P1 P2 Another substitute good that would affect the cross elasticity of demand for new cars is secondhand cars. If price of secondhand cars drops and the cost of running it is relatively cheap, people would demand less of new cars. However if it is more expensive to purchase second hand cars and run it the demand for new cars will increase causing a positive cross elasticity of demand (Slogan:

A high price elasticity of demand insinuates that profit margins will continue to soar, if selling prices are reduced any further. As the point of maximum profit is apparently not yet reached, the company is advised to extend the range of the forecast. But is the highest profit naturally the best profit? In an unpredictable market customer perception is often the most viable source of information. It is difficult to directly benchmark the CAR prototype against other market offerings and therefore a value based approach could provide a better understanding of the price ceiling.

The nature of demand for petrol in the short run the tax will be an effective source of revenue, but in the long run it is predicted that people adjust the consumption of petrol, this will take time, people will consume less as prices increase over time. There are ways that fuel tax can be reduced reliance on fossil fuel such as using more fuel efficient cars, mass transit, car pooling and traveling less. In some parts of the world there are some differences when it comes to fuel taxes between which results to enormous levels of people crossing the border to buy fuel at a cheaper price. Some countries have little or no border control at all. Many of people drive across the borders just to fill up there tanks with gas.

If an individual’s income were to increase however, the demand for the cheap cars will decrease while the demand for costly cars will increase. Therefore, cheap cars are considered inferior goods, while luxury cars are considered normal goods when income is low, individuals tend to opt for public transport. For example, consider the two graphs below. The graph on the left is representative of two normal goods, in this (ridiculously expensive) instance; a luxury car and a jet ski. The graph on the right, is representative of two inferior goods, in this instance; steak and hamburgers.

Turkcan and Ates (2010) point out that the increase in outsourcing in the automobile industry has increased intra-industry trade; outsourcing has allowed manufacturers to get parts from the “best suppliers” which results in “lower unit costs”. They also indicate that companies “benefit from economies of scale” when outsourcing (Turkcan, & Ates, 2010). Another difference is that since monopolistic competition cannot predict which country will import and export in intra-industry competition, differentiation of goods may create comparative advantage which may determine which country will import and export a certain variety of a good. For example, Japan mainly makes family cars, like Toyota, while Germany mainly makes sports cars, like Audi; therefore, Germany will have a lower unit cost for sports cars and Japan will have a lower unit cost for family cars (Dudovskiy, 2012). In

It is often the case we have to buy cheap second hand cars as new cars are very expensive. Sometimes this is fine and you can have a reliable car, but other times you pick one up that’s not been well maintained and can cost you a fortune in repairs and keeping it on the road. Petrol prices generally go up, rarely coming down even when global fuel prices go down. This is an ongoing expense too, a car is useless without fuel. Picking a car with a smaller engine can save fuel and modern cars also have been designed with better fuel economy, but as I have already mentioned modern cars cost more money upfront.

When exchange rates increase, and more dollars are necessary to purchase foreign currency, the relative price of foreign goods drops and people will tend to purchase more imports. Abroad, American cars become more expensive. People abroad will therefore purchase fewer Ford vehicles. Ford theoretically suffers a double whammy – however, as in the case of the balance of payments above, it is difficult to assess the net effect on the company because it is so diversified globally. If the exchange rates decrease, the effects are reversed.

One way that the automotive manufacturers may minimize their fixed costs is to renegotiate their lease. The companies leasing the facilities from the firms have leverage in negotiation... ... middle of paper ... ... increasing revenue due to more sales and the small cost to perform oil changes on cars is minuscule in comparison. In order for a company to maximize profit it is important to lower both variable and fixed costs while still producing a high quantity of output. This formula will lead companies down a path that will bring great success if successfully completed. Although fixed costs may seem to be hard to change, car manufacturers can use their leverage from extending leases to negotiate lower prices from industrial realty firms.

While the demand for vehicles increased, the price remained stable for a time making the demand inelastic because there was not much change in the price. In current times consumers can choose from a vast amount of makes of vehicles with as many models that although the auto itself has become a necessity, some cars could be considered a luxury. For instance, it may be necessary to own a vehicle however, not a necessity to have it equipped with a sunroof, navigation systems and DVD players. Another factor that directly affects the supply and demand of autos is the price of oil inflating fuel cost so less of the population is purchasing automobiles. This directly affects the manufacturing of how many vehicles are being produced.