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Re: Manufacturer's Profits at Buyer's Expense

To: Chuck Renner <>
Subject: Re: Manufacturer's Profits at Buyer's Expense
From: "Paul T. Root" <>
Date: Fri, 6 Dec 2002 13:00:02 -0600
On Fri, Dec 06, 2002 at 12:13:03PM -0600, Chuck Renner wrote:
> > "According to Deutsche Bancs auto analyst Rod
> > Lache, on average, the automakers make $5,500 more off
> > of every mid-size SUV than they do off of a car."
> > 
> > If they want to scalp those who buy them for fun, ok.  But, 
> > for those who
> > need one for a tow vehicle - shame on those greedy *#&$ companies.
> Uh, they're making that much more for several reasons:
> 1) Volume:  the best selling vehicles in the US have been pickups for the
> last few decades.  SUV's like the Explorer share many components with the
> Ranger, and in and of themselves sell in huge numbers.  All of that
> expensive tooling, along with engineering and development cost are spread
> over a huge number of vehicles, so the profit per vehicle is going to be
> higher because of that.
> 2) CAFE and other regs:  Yes, the vehicles classified as trucks don't count
> towards the overall CAFE rating.  But the fact still remains that the
> automakers have to take a hit on small cars to sell them and boost their
> CAFE rating.  If they're losing money in one segment, they have to make it
> in another.

But the reasoning behind trucks having a lower CAFE rating are no longer
valid for whick 98% of the trucks are being used. And that is as a passenger

> 3) Resale:  Trucks tend to do very well in resale value.  So while you may
> spend more up front, you probably won't lose as much to depreciation.
> 4) Luxury content:  How many stripper SUV's do you see on the road?
> Everyone who's buying them is getting them loaded with luxury features.
> These are where the real profits start adding up.
> 5) Why do you need a luxurious mid-size SUV as a tow vehicle?  What's wrong
> with buying the stripped down version for a lot less money, or getting a
> regular pickup, which doesn't tend to have as much premium tacked on.

I bought a pretty much base Mazda Navajo back in '93, steel wheels, manual
transmission, no cruise, wind up windows, cloth etc. I used it for camping
etc. It was a pretty good truck. It did what it was supposed to do. It didn't
pretend to be a car, and while I used it a daily transportation, I also used
it a lot as a truck.

I took a bath on resale value. And it had low miles and was in very good

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