TOPIC: ARGUMENT73 - The following appeared in a memo from a manager of a car dealership.
"Ten years ago, long-term car leasing became available in our country of Mohilia as an alternative to outright car ownership, and leasing has steadily risen in popularity. For each of the last five years, the number of people leasing new cars has surpassed the number buying new cars. The average age of cars driven in Mohilia is six years; hence, if new car leases again outnumber purchases this year, it is likely that the majority of drivers will be driving leased, not individually owned, cars. Therefore, we should change the focus of our business from selling cars to leasing them."
Why should they change the business from selling cars to leasing cars? It is not wise to take this transition so swiftly and boldly merely because the decision maker assumes that leasing car prevails over the way of driving cars. As a profit-for company, ultimately the overall profit should be taken as the priority by the decision maker rather to follow certain fashion blindly, let alone this fashion might not be accurately justified. For that matter, the fact leasing cars seem to be popular than buying cars could not imply that this will be a sound investment bringing the company great money.
Quite doubtful and unwarranted about the argument is the conclusion drawn from it that, as with the ways of using cars, the way of leasing cars has already prevailed over the way of buying cars. The conclusion is largely based on the affirmation of the efficacy of the evidence that-the number of people leasing new cars has surpassed the number buying new cars. How do they get such a conclusion that the number of people leasing new cars is more than that of buying cars? Do they merely draw the conclusion from the sales reports coming from all the car selling companies or the car leasing companies？ In addition, the author fails to tell us what the “long-term” means. Is that merely one month, or just a week? Assuming it is around a month, if a driver who chooses to lease the car rather than buy a new car, in a period of one year, he will lease the car for twelve times. And it is quite possible that he leased different cars in different leasing companies. Ostensibly, the sales report alone will show that there are twelve persons having leased cars, but accurately it is one. As a result of wrong statistics, the conclusion that there are more people who lease cars rather than buy cars is quite unfounded and dubious.
Meanwhile, the author fails to take the sales of second cars in private situations, those sales that would not be recorded by certain company sales management department though. Among the drivers who choose to buy cars, a large portion of them will choose to buy second cars, as they are short of money, or just don’t want to buy a brand new car until they become a skillful driver. The conclusion that there are more people would rather lease cars rather than buy one is little of no convincing by ignoring the second car sales market, however which is much likely to take up a large portion of the whole car selling market.
Granted that there are really more people in society who would like to lease cars rather than drive cars, but a leasing company might not definitely reap benefits engendered from growing number of consumer.Compared with selling a car which price might be 20000 dollars, the price for leasing a car for one month might be only 200 dollars. If so, until the same car has been leased up to 100 times, could the leasing company make the same amount of money by selling a car.But it is impossible to do that. As the author mentions, a car could be expired in six years. Hence, on average, a car could only be leased at most 72 times far lower than 100 times. In addition, compared with selling a car, there are more costs to run the leasing cars business, involving repairing and cleaning cars, buying oil for the cars, changing tires of the cars, renting or building more lot parking to store those cars, as well as hiring more employees to do all the job. The expenses altogether might greatly surpass the profits from leasing the cars to consumers. Consequently, the company will unfortunately suffer from deficit rather than revenues.
From the reasons and analysis above, it is notice that the hasty decision of transition from selling cars to leasing cars might pose a great problem for the company, rather than increasing their profits. To make the final decision, the top leaders of this company need to take more issues, such as the second car sales, the additional cost of running leasing cars business, into account.