Wednesday, September 23, 2009

ECONOMICS AND YOUR VEHICLE

The buzzword of the past several months has been bailout. Each day we see and hear where the government is extending our tax dollars to prop up banks and automakers, industries that have long been considered pillars in our economy. News reports tell us how Ford, General Motors and Chrysler are being forced to shut down plants and buy out dealers to adjust their output downward to match a weakening demand for their products. Considering there are fewer plants producing vehicles and fewer dealers open to sale and service those vehicles, you might wonder how this will affect your ability to keep your automobile properly maintained. Fortunately, you need not worry. Supply and demand, the same economic forces that have automakers scaling back production of new vehicles, will see to that. As people choose to keep their old vehicle longer, they will have to spend more on repairs as parts wear out. This demand for vehicle repair will do two things. One, it will keep independent shops and surviving dealers busy working to keep your vehicles road worthy. Two, it will keep parts manufacturers busy working to supply the parts needed. Eventually, a vehicle will reach a point where it can no longer be repaired, requiring it to be replaced. This will increase demand for used or new vehicles. At that point, automakers will begin producing more vehicles to keep up with demand. With all the bad news we hear, it’s easy to think that things will never improve. But the economy works in up and down cycles (expansion and recession). As people buy new products, the increased demand causes manufacturers to produce more. This creates jobs to keep up with the increased demand. As more and more people have new products, fewer are needed, causing manufacturers to produce less and employ fewer people. When the new products wear out, people will begin replacing them, putting more to people to work to produce the new products needed and starting the cycle all over again.

  © Blogger template 'The Lake' by Ourblogtemplates.com 2008

Back to TOP