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Let's think rationally a minute and avoid the boogie man hyperbole.
If you are in the car business and your plan is to sell 100,000 cars a year, you enter into forward commitments for raw materials, parts, paint, labor, warehousing and shipping. And promises to your dealers for that volume so they can make similar forward plans. Break those promises and those suppliers won't deal with you, or will even go under, when good times return.
When the world economy/credit crisis/fuel crisis dejour occurs, and even if the factory has done everything right, continued sales of 3,000 units a month at your planned prices means you won't make it to 100,000 annual units as planned, so you cut unit prices to meet demand and keep those promises you made to suppliers and dealers. I spoke to a dealer recently and he said the steep discounts on unsold new cars we are seeing is the factory support program.
But the factory may also cut back temporarily on production, then when available inventory comes in line with current demend, they don't have to discount anymore. While the car business may be operating at reduced levels overall, eventually the inventory on some models meets or is less than the demand, thus Suburbans (4Q08 & 1Q09 reduced production levels) and hot sports cars (trendy new models) can hold their prices, while other models still need to be discounted.
In addition, certain regions of the country are stronger markets for return buyers on particular brands, such as Saab in New England. The dealer I spoke to said he has repeat buyers that say give me the same car, but a different color. That customer base will always return for another purchase thus avoiding heavy discounting. A Miami dealer may have to offer discounts to move the metal. So regional brand loyalty affects sales and pricing.
The papers warned that lower factory production rates starting back in 4Q08 might cause shortages of particular models once things settled down. It takes years to plan and produce a car, but the customer can change his mind on a purchase overnight. Well positioned models in short supply command a premium, other models, well, not so much.
While my respect for some dealers and their antics is right down there with my respect for politicians, its the law of supply and demand that you are witnessing, not an evil plan to cheat you.
posted by 216.187....
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