Quote:
Originally Posted by switchlanez
Oh how I wish. I agree tCs will sell more so Scion will simply make less FR-Ss than tCs. Their analysts calculate the different price points and the demands each will garner. This gives them an array supply curves intersecting an array of demand curves, then they calculate which intersection maximizes profit.  |
It's not that simple, because maximising profit isn't always the goal for a given model. If you have a niche or enthusiast car, sometimes they'll reduce the profit margin or even take a loss (LF-A being an obvious example), in order to bolster the image of the marque as a whole. Since Scion is in a steady decline, they might be willing to sell the FT86 at a reduced profit margin, in order to change the perception of the brand (ricey teenager cars). That in turn will help the rest of the line-up. Especially with a niche vehicle like the FT86, that's very possible.
Also, by nature, entry-level pricing means very slim profit margins. That's why GM/Ford resisted entering that market for so long with quality products, because they didn't want to deal with say a $1,500 profit margin (and with their labor costs it became even harder). Luxury cars, giant SUVs and trucks have better margins than ~$20k cars.