Link: http://www.cbc.ca/consumer/story/2008/10/14/cars.html
Summary
On Tuesday October 14th, Statistics Canada released new figures that the new car and truck sales in Canada are down for the third month in a row. The figures are based from the car and truck sales in August, which means since May, car sales have been lower from the previous month for the third time. The August sales were down 2.3 percent from July, with the passenger car sales taking the biggest hit sliding 4.2 per cent in the month. However, the sales of passenger cars built overseas increased by a mere 0.4 per cent. Since the start of the year, Canada new car and trucks sales have been continuing to fall due to the increasing fuel prices and the economic meltdown. The figures did not include September’s sales, which could be way worse with many more economic struggles in the country.
The Operation of a Market: The Concept of Supply and Demand
The declining demand of new cars and trucks in Canada can cause changes to the supply of the cars and trucks. When people have less desire to buy cars and trucks, the supply of them will remain high until the demand goes up again. This is an example of supply and demand. The factors that have affected the dwindling demand of cars and trucks could be because of the increased fuel costs, income uncertainty and the switching to other alternatives such as public transit. The increases in gas prices influence the demand of the car and truck sales because if gas is too expensive then people can’t afford a car, which needs gas to run. Therefore gas is a complementary product to cars. People’s incomes also affect the demand of cars in that when people have less money to spend, the demand of costly items like cars decline.
Reflection
I believe the slowing economy is the main factor of why the there is a declining demand of cars and trucks. With the economic outlook uncertain when people’s jobs are at risk and investment savings are deteriorating, people would rather save some money than to buy a new car or truck. Furthermore, people are continuing to look for more sustainable sources of transportation like taking public transit or riding a bike. The high fuel prices might also give second thoughts to people thinking of buying a truck or SUV where those vehicles consume a lot of gas. It seems that the demand of new cars and trucks will continue to go down in the upcoming months as the economy continues to worsen.
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6 comments:
I agree that fuel, being a complimentary product to automobiles would have an effect on the demand. If the complimentary of a product increases in price, then chances are the product will also and this applies to the situation here. The fear of a recession also affects the demand. If people are uncertain about their future incomes than they would probably choose to delay their purchases until economic problems are resolved. It is also worth mentioning the third monthly decline was due to the fall of passenger car sales and North American models. This could be due to changing tastes/preferences of people. With smaller, much more fuel efficient cars in demand, passenger vehicles would take a blow to sales. European models are also becoming more popular which affects the sales of North American cars. Overall, increasing fuel prices, changes in taste and the current fear of a global recession play a role in the decreasing car sales.
J.Tam
Block F
It comes to no surprise that the car industry's sales are going down due to the rising gas prices and the global economy as it is right now. I think that this decline in sales will continue at least until the economy is in better shape than it is right now. I also think that people are thinking about choosing a more gas efficient cars and North American models are not known for that, they are known for their horsepower. People are also thinking about preserving the environment too, and that plays a big factor in choosing a car. Consumers are thinking about hybrid cars even though they are slightly more expensive than the regular models. My family is also thinking twice about buying a car at this present time due to the economy. Its better to keep and save the money for now just in case the economy gets really bad. It is the safe choice.
I agree the factors of high fuel prices and the declining economy will most definitely affect the decisions of the buyers. Most consumers are aware of the outcome of the future prices and are willing to wait, before purchasing. Also, nowadays, people are more into the trend of fuel-efficient cars. As we all know, gas prices are extremely expensive right now, especially for students. This affects the demand greatly because most people in North America are young drivers. Consumers want to save more money on fuel by driving a hybrid car, and at the same time, release less green house gas into our environment. This change in preference of cars affects the demand and supply. The more demand for hybrid cars due to high price of oil, the more supply the company has to manufacture. At the same time, the demand for larger sized cars such as SUV’s will decrease.
H.Ma
Block E
I agree with your views about gas affecting the sales of cars. When the price of gas increase, the price of owning and running a car increases as well due to the fact that gas is a complimentary product to the car. Also with the economic down fall and expectation of unemployment or decreased income, there is no doubt less and less people are buying new cars. Instead, many are investing in used cars that cost a lot less than a new one. The other impact of high fuel cost is people’s preferences of types of cars. Commercials stress the energy efficiency of a car more than ever now and since the Japanese car manufactures have more energy efficient cars, more American car markets are lost. Which drags the American economy down even more, causing a vicious cycle that is hard to break.
Yifan D
I agree with the declining demand of new cars and truck in Canada having a effect on the supply of cars and trucks. The fact that oil has gone up in price is definitely affecting consumer and buyers opinions on purchasing new automobiles. Buyers realize that it is quite costly to maintain an automobile, fuel, energy, taxes, and also insurance add on to the tab. The automobile is certainly a costly item, so it would be logical that the demand for automobiles would decline sooner or later. Buyers would also consider the car’s performance and fuel efficiency statistics, being conscious of fuel consumption rates and reliability is something buyers always look into.
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