Holden Austrailia is Done

Holden Australia is Done

It's not that people are balking at paying a premium price, it's people are not willing to pay an exorbitant price.

The same will happen in every country. Did you see where the top Ford and GM trucks retail for about $95,000 now? Back in the 90's when the Jeep Grand Cherokee came out, the manufacturer made an average of $7,000 profit on each one. I can only imagine the profit on Ford's SD trucks or GM's Escalade.

http://www.msn.com/en-us/money/mark...car/ar-AAtKZkB?li=BBnbfcN&ocid=LENOVOSIGDHP17

Profit margins on SUVs and trucks are widely believed by analysts (companies are often somewhat hesitant to reveal exact numbers) to be quite a bit higher than on other vehicles. One idea I've heard is that manufacturing costs are pretty similar for most vehicles across the board, from hatchbacks to small sedans through crossovers, SUVs, and most trucks, but that they can't sell the former types for nearly as much as the latter. As electronic doohickeys and sophisticated mechanical systems proliferate across the lines, from entry-level subcompacts to luxury models, the cost of making everything goes up. At the same time, though, consumers aren't willing to pay the same for everything, and expect entry level small vehicles to have entry level costs. That's a recipe for economic disaster from the manufacturer's point of view, so they push the SUVs and trucks that people will gladly pay more for. Because the costs aren't that much greater, the profit is much more robust. It also accounts for why companies are giving hatchbacks, small sedans, and other traditional vehicles the cold shoulder. When you have to offer all the high-end safety and entertainment stuff in every model from the lowest to the highest, and you can't push cost of manufacturing any lower than you have it, you have to make up the difference in price. And the market will only sustain higher prices on vehicles that, in the USA at least, are perceived as being "worth more," which usually translates into "bigger."

With larger vehicles becoming lighter, the old "paying by the pound" excuse gets weaker.