Sample Essay

The car manufacturers are primarily concerned with the change in the selling mix as trends shift from larger cars to smaller cars and the international industry views this shift to be more of a permanent nature than a shorter one[1]. Sale of large cars were pretty much dependent on low rate finance lease available for cars but due to recession this credit will not be available any time soon. New large cars being sold in the international market are also supported by various scrappage incentives offered to consumers.

The automobile industry has always preferred selling larger cars over smaller cars as the profit margin is much higher on larger vehicles as compared to small ones[2]. This fact was acknowledged at the Frankfurt car show and the need for companies to focus on generating profits from smaller cars was stressed. Car manufacturers can cut down on fixed costs of manufacturing smaller cars and instead of depending on high profit margins higher volume of sales can be focused to increase the overall revenue and profit levels.

[1] Arbor, A. Shift to Smaller Cars, Trucks Likely Permanent. September 13, 2009. September 27, 2009<http://www.tampabay.com/news/business/autos/shift-to-smaller-cars-trucks-likely-permanent/1035520>

[2] Seitz, J. L. Global issues: An Introduction. Oxford: Wiley-Blackwell, 2002

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