0910G[North America Flying] Argument73 by haunteagle

haunteagleUID: 2609432

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."

The argument, while seems logical, has some flaws. For one thing, the argument fails to take the costs of changing from selling cars to leasing cars into consideration. For another, the argument is over-optimistic about the market and does not provide the figure the profit of leasing cars. Finally, the argument does not rule out alternative explanations for the increase in leasing cars.

To make profit we should first take the costs into consideration. The argument fail to discussing how much should be spent to change from a selling company into a leasing company. It is entirely possible that the firm has developed a large number of branches of selling cars and signed long-term advertisement compact with the media. Moreover, the service of the sold cars during the period of changing from selling to leasing is a heavy burden. The whole cost of change may be too high for the firm to sustain.

The argument is over-optimistic about the service of leasing cars. Though the number of people leasing cars surpasses the number of buying them. This does not necessarily mean that the incomes of leasing cars will surpass selling them. Perhaps leasing a car has much less incomes than selling a cars and that is the reason why many people choose to lease ones. Moreover, since there are so many leased cars in the market, the competition may be extremely fierce. The company may not have a share of the cake if entering the leasing market.

Finally, the argument fails to rule out alternative explanations thriving of leasing cars market. Leasing a car provide people with an convenience that they can change the cars frequently. It is possible that the people leasing cars will change their cars every year while the people buying cars will use them for a long time. What is more, with the mere figure of average age of cars we cannot get the conclusion that the leased cars may be the majority. Perhaps the leased cars have a comparatively short life, maybe 3 or 4 years. When take them into the statistics, the average age of cars drops while actually the total number of bought cars is the majority.

To strengthen the argument, the manager should provide a detailed balance sheet of the incomes and costs of changing from selling to leasing a car. Moreover, the manager should also provide substantial figure that the number of leased cars has surpassed the number of selling ones. To further strengthen the argument, a survey of preference of leasing or buying a car is recommended.