StatGuy2000 said:
I'm afraid you are mistaken that American cars are inherently more expensive than Japanese cars specifically...
Er, you actually agreed with me but did the analysis wrong and concluded incorrectly that you disagree. I'll re-arrange the discussion and start with the agreement, then explain why it is total agreement, not partial agreement:
Furthermore, Japanese vehicles were (and to a lesser extent still are) known for their superior quality and performance in comparison to many American vehicles.
Agreed.
And here's why our agreement is complete, not partial: "superior quality" and "cheaper" are the same thing. Here's where the error is:
For example, look at the midsize car market today. A 2018 Toyota Camry would sell for a starting price of $27,690 Canadian. Some direct US competitors would include, for example, the 2018 Chevrolet Malibu, which has a starting price of $22,295 Canadian (all of these numbers are what I gathered from Google searches - my assumption would be that US prices would be lower, but would show the same price pattern).
The hidden assumption here should be that "starting price" cars are equivalent, but based on the previous quote, I don't think you believe that, and neither do I. You can't compare cars that are both different quality and at different price points - it doesn't tell you anything. You have to levelize one or the other (or both separately). For counter-example following your lead, I could say a $27,000 Chevy is a better car than a $22,000 Chevy. It's an obvious and therefore pointless statement. Well it's just as obvious and pointless to say a $27,000 Toyota is better than a $22,000 Chevy
*. Of course it is!
The properly levelized real question is whether a $27,000 Toyota is better than a $27,000 Chevy. I think so and I'm reasonably certain you agree. In fact, I'm reasonably certain this levelization is a hidden assumption in your first statement: "Japanese vehicles were...known for their superior quality..."
for equivalent priced vehicles.
The other side of the coin tells us why better = cheaper. If a $27,000 Toyota is better than a $27,000 Chevy then is is also true that a $27,000 Toyota is cheaper than an equivalent quality Chevy. Or, since Chevy's quality is inherently lower, you have to pay more to get the same quality.
How much exactly I don't know; "quality" is subjective. But per my previous post, if the difference is $2,000 (American), that's enough to drive GM to bankruptcy. And that's the point of all this. If $2,000 is the difference between profit and bankruptcy, for GM, what's a $7,500 price swing for Tesla going to do?
*Or for the Telsa buyer's perspective: a $47,500 Tesla
isn't better than a $40,000 Tesla with $7,500 in incentives.
Asides:
Japanese car companies like Toyota tended to specialize in smaller vehicles which American car companies historically did not specialize in.
Yes, this was a contributor too, and in particular it hurt GM and Crysler in 2008 because the one-two punch of higher gas prices and a weakening economy drove people toward smaller cars. As the article I linked in the previous post shows, the cost-competitiveness problem predated the recession and gas price spike, but that provided a 1-2 knockout punch that bankrupted both in the same year.
I will not talk about Korean cars for the moment.
Incidentally, I used primarily this analysis to select to buy a Kia Optima instead of a Toyota or other. I set a price ceiling and bought the highest quality car I could get for that money.
