Recession - What Recession Is That Then?

[GuestHouse]

My wife and I wandered into our local Honda showroom yesterday to have a look at a new car, our budget near the top of the range the showroom had to offer.

So there’s a recession on, right! And deals to be had, right!

Wrong.

Offer Honda a large wad of cash (well company cheque) and the best deal Honda have to offer is free floor mats, a bit of plastic trim and a couple of cheap Honda travel bags.

I forgot of course that as a prospective customer, I actually owe Honda my patronage.

[thaihome]

Was this in Thailand?

Could it be that the price you were quoted was at the bottom already? After all, there is a price below which is lower then what the car cost to make and transport to the dealer plus some minimum profit. Are they expected to go below that?

TH

[teacup]

R U doing an article for the Economist?…..that’s pretty bad intro lines….haha

Ok ….go find your second hobby.

Sorry ….nothing to contribute here, coz…..im a non consumer of non essentials (at the moment)

[samuibeachcomber]

I dont think thais understand the concept of reducing prices to attract more sales.But yes there is a recession going on,food prices up,interest rates low and for some exchange rates bad.this is the first recession in my life that i can truly say has affected me personally.I am retired,and my wife is about to lose her job.

[thaihome]

At least auto dealerships seem to recognize the principle of reducing prices, the automotive classified sections of virtually all newspapers (Thai and English) are filled with adds from dealers quoting prices. Of course, they have very little to bargain with as these days, the margins tend to be very low already.

[geriatrickid]

Honda & Toyota are often accused of enforcing a pricing policy at the dealer level. I believe it is technically legal to set a minimum purchase price. Honda knows it has a good product and people will pay slightly more for the product so there is no need to cut prices which can have a negative impact on the fleet leasing resale values.

As a group, Japanese MNEs have a reputation for price fixing throughout the world. Sometimes its blatant like the recent US$31million fine against Hitachi for its LCD pricing. Then there is the price fixing that can't be ignored like the November 2008 auto glass supplier fines. The European commission fined four companies, including Britain's Pilkington, a record €1.4bn (£1.1bn) for operating a five-year cartel in the €2bn car glass market. Pilkington, owned by Japan's Nippon Sheet Glass, had to pay €370m for its part in the price-fixing and market-sharing cartel that was in operation between early 1998 and early 2003. Senior managers from the companies in the cartel held secret meetings in airports and hotels in Brussels, Frankfurt and Paris to rig the market for windscreens, sidelights, rear windows and sunroofs in new European cars.

I am unaware of any regulatory oversight for price fixing in Thailand, so perhaps the practices are a bit more extreme in Thailand. I have never purchased a car here, so I haven't had a showroom crisis.

[samuibeachcomber]

R U doing an article for the Economist?…..that's pretty bad intro lines….haha

Ok ….go find your second hobby.

Sorry ….nothing to contribute here, coz…..im a non consumer of non essentials (at the moment)

are you doing it tough at the moment?

[PhilHarries]

Unfortunately a lot of people think just because they walk into the showroom with a bulging bag of cash (figuratively speaking) they are God's gift to the salesman. However truth is stranger than fiction and many car dealerships make much of their profit from the finance companies offering the hire purchse deals.

Cash used to be king but credit, even in today's world, often trumps it.

Never mind zero interest rates they are talking about people having to pay the banks to look after their money. Straight up! I thought it must be an April 1 joke slipped out early but the article was, on the face of it, deadly serious.

[Heng]

Yeah, and my neighbors aren't all holding garage sales. <deleted>?

As with all things, it's all relative. Not every car company has to follow the "pants-on-fire-what-are-we-going-to-do-because-we're-X-$US billion-in-debt" approach.

[teacup]

R U doing an article for the Economist?…..that's pretty bad intro lines….haha

Ok ….go find your second hobby.

Sorry ….nothing to contribute here, coz…..im a non consumer of non essentials (at the moment)

are you doing it tough at the moment?

Y??? do you want to sponsor me?

[teacup]

Yeah, and my neighbors aren't all holding garage sales. <deleted>?

As with all things, it's all relative. Not every car company has to follow the "pants-on-fire-what-are-we-going-to-do-because-we're-X-$US billion-in-debt" approach.

oii you must in some richii area,...P'Heng

A garage sales?...huh.........unheard concept!!!,....I thought we "the thais" suppose to keep everything right down to a plastic bag!!!!

Hmm......mom's maid even freeze used-ziploc bags for the future reuse

Edited March 13, 2009 by teacup

[gennisis]

Was this in Thailand?

Could it be that the price you were quoted was at the bottom already? After all, there is a price below which is lower then what the car cost to make and transport to the dealer plus some minimum profit. Are they expected to go below that?

TH

There does come a time when selling below cost does apply.....It shows the bank that your company has ...CASH FLOW. Of course that cannot go on indefinatly but if it is thought that trading conditions will improve in the medium term future it can be justified and keep the company trading until that time occurs. It also reduces the ammount of stock being held,which in itself costs the company money because the stock was probably financed by a credit loan from the bank or the manufacturer.

[think_too_mut]

I just bought (last Tuesday, 10. March) a new Toyota Vitz (Yaris) in Japan.

(currency conversion via Oanda currency convertor site)

The price quoted (with ETC machine and iPod capable stereo) 500,000B.

The salesman said, for extra 30K baht I can get "Limited" version, pearl color (15,000B), keyless access and keyless ignition (16,000B), discharge lights (15,000B) and some things I can't remember now for another 15,000B.

So the price did not go down, it went up, although he kept on throwing in more and more goodies. It is "Netz", the largest Toyota affiliated dealership network.

Finally, while Toyota is reducing capacity, closing factories for weeks, the delivery will happen 12. April, more than 1 month later. General opinion is that they have tens of thousands of cars in their backyard and at the dealerships. Not true.

He even said, if I wanted a vanilla version, it may take longer - 2 months. If I oreder the "Limited" version, it gets priority over regular and manufacturing order jumps the queue as the car is more profitable for Toyota.

The deal happened and delivery will hapen in the very Toyota place: Toyota City near Nagoya. So, no transport to eat up the time.

There is just so low they can go and the dealer was anxious to close the deal this quarter, it's end of financial year in Japan.

Edited March 13, 2009 by think_too_mut