I listened to an interesting thing on the news last night about an important new price breakthrough coming in the car business. It will begin with a new Nissan Sentra with all the main features such as AC, Automatic Transmission, and Radio for $10,995 plus destination. It went onto say that Hyundai will follow shortly with a similar offering. What made this newsworthy is this is the first time low priced cars won’t have that cheap feeling like in the past. They will actually be built well with all the standard features.
This is happening to a car market where the average selling price is $26,000. Like most parents who go through the process of buying cars for their teenagers I had the thought, “why doesn’t someone make a good cheap car for $10,000?” That’s all most students and young people want and can afford. Well I guess I wasn’t the only one having that thought.
As a long time sales rep I think I can guess what the reaction will be at the car dealerships. I think the car will be largely ignored by most sales reps because the commission will be a lot smaller than on a $26,000 sale. Either that or the dealership won’t promote the car because they will want the sales reps to continue to focus on the high profit margin cars.
Well, the same thing happened in the copier business with the introduction of A4 copiers a few years ago. This is a scary proposition for most dealerships. For example, we sell a new 28 pages per minute copier/printer/scanner/fax for $1395. The equivalent A3 MFP sells for over $5000. What’s the difference between A3 and A4? A3 has 11 x 17 capability. Guess how many people need 11×17 copies and prints……….about 6% of the market.
The A4 category is the fastest growing category in the copier business. The new generation is commercial grade with cheap long lasting supplies just like the larger copiers and they are very reliable. That surprised all of us. But then we were judging it by it’s size. After all, for years copiers were judged by their size and speed. We now have a situation where the customer wins. You just have to make sure you’re dealing with a sales rep who will offer an A4 when it’s a better choice.