Argument73 [黄金十二宫]第八次作业

永远的圣者UID: 2182901

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."
WORDS: 455          TIME: 0:43:14          DATE: 2006-6-8

In this argument, the arguer advocates that the car dealership should change its management focus from selling cars to leasing them in order to achieve a great benefit. This recommendation is based on the number of car-selling and car-leasing, that in the last five years, the latter one is greater. Meanwhile, the arguer emphasis leasehold to be a more favorable choice if new car leases again exceed purchases this year. This argument is problematic for two reasons.

The major problem with this argument is that the arguer fails to convince us that leasing is a more profitable business. First, as the information the manager shows, new cars are needed both in purchase market and leasing market. Though the growth of leasing may shrink the buying of new cars, yet it may still stimulate the aggregate demand of cars, which means the increase in leasing is greater than the reduction in purchasing. Thus, the dealership has as many or even more opportunities to enlarge its selling since the leasing companies are, if anything, growing clients themselves. Second, smaller trade of the cars does not mean smaller payoff. As the market often represents, the leasing cars are incline to be temporary cars which leaseholders keep them for a little while just for some specific reasons, e.g. transitional goods between their two cars, a individual taste of changing cars frequently, or requirement to make the cars always new. Then, these cars may be less expensive than the selling ones as the owners like to buy luxuries to show their wealth, status, or taste. The author ignores to take into account how much can we earn from these two kinds. Third, it is lacking survey of other competitors. If too many companies have already entered the leasing business, it will be more difficult to make money from the customers, since the competition reduces the benefit.

Another point worth considering is that the arguer’s speculation that majority of drivers will be driving leased is groundless. Although supported by the five-year data, the choice of the customers is easy to change at all time. The restriction made by government will be one of the reasons that they tend to give up leasing, and other incidents may happen, including scandal of leasing companies, depreciation of new cars, or change of people’s mind. Thus, the trend of leasehold nowadays may not be direction tomorrow, and the arguer’s suggestion will be further infected.

To conclude, this argument is not persuasive as it stands. Before we accept the conclusion, the arguer must present more facts that the change of management strategy will surely meaningful. To solidify the argument, the arguer would have to produce more evidence concerning the difference between short run and long run.