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73The 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 memo of manager proposed to change selling cars to leasing them according to the demand trend of Mohilia. His statements seem grounded, but if we take a careful scrutiny we will find that there are some logical fallacies in his statements.
Firstly, author mentioned people who lease new cars are more than the ones buy new cars in the past five years as the reason to change their business, but I cannot agree with his view. On the one hand, there are no data to support his argument, such as the detail number of people leasing cars surpassed, the percentage of such people in the local popularity, the growing number of each year in Mohilia. Without these crucial information about the market in leasing new car, it is hasty to make the decision. On the other hand, we have no idea about the cost and benefit of leasing cars in comparison to selling cars. Although we may see prosperity in the cars leasing market, whether it is profitable is still open to question. So if the manager hopes to persuade his supervisor into the car leasing area, more detail information should be collected to support his point of view.
Secondly, the hypothesis that majority of drivers adopt to lease cars, from the market situation of this year is still questionable. Admittedly, the number of people leasing new cars steadily risen in the continuous five years, but the assertion of majority driver will choose to lease car in light of the pass is unfounded. Author did not provide the number of drivers in Mohilia who lease cars, so his hypothesis cannot be accepted.
Last but not least, the suggestion of changing the business focus from selling cars to leasing them is not a proper occasion for the manager to enter this field. As mentioned by author that the average time span of cars is six years and after last five years the boom of leasing cars market, how many drivers remained not leasing and eager to do so? How many shares will this car dealer gains from this mature market? How can they survive in this harshly competitive field? The answers to these questions determine the next action of this business.
In a word, a detailed analysis report on the market situation including the demands of their customers, data of market contribution and benefits contrast to cost will be great use to make the finale decision. |
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