Tuesday, September 3, 2013

US Car Buyers Finding a Shortage of Popular Models

Building on this week's readings, an recent article WSJ: Trouble Finding a New Car? Shortages Begin to Appear describes the current phenomenon in for US car buyers: they cars they want to buy are not in dealer's lots. With these shortages prices for these in-demand cars are rising despite the typical summer sales to prepare for the new model year.

The article mentioned,
Now, [auto makers] are facing a delicate balancing act as supply and demand converge. Expanding plants is expensive and can backfire if sales growth slows. But tight inventories can temper an auto maker's growth by nudging prices higher and causing shoppers to turn to competitors.
It is understandable that after the Recession car companies would be cautious about adding costly car factories. "Cleaning the Crystal Ball" spoke to the challenges of uncertainty and forecasting into the future. However if these shortages persist, how will car sales fare in light of the rising popularity other car-owning alternatives such as Zipcar and Uber? In particular, the latest generation of young adults (an age group historically responsible for a substantial portion of car purchases) has shown an unprecedented decline in interest of car ownership [1]. Will this intersection of car shortages, viable alternatives, and change in consumer preference factor into the forecasting and strategies of auto-makers?

[1] http://business.time.com/2012/05/02/gen-ys-take-on-car-ownership-not-cool/

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