Do Not Overbuild Capacity!

So it seems demand exceeds supply for NA autos.

I suggest not going nuts.

I wonder what the effect of having a chronic undersupply will be on profitability and pricing and resale value for consumers.

Remember the Prowler?  Chrysler refused to make more than they initially set out to make.  The demand was way over the supply.  The price went nuts.  The aftermarket or used car price went nuts.

Who lost here?  No one that I could make out.

The Prowler was not a mass market vehicle, but there is a valuable lesson here, especially when compared to flooding dealer lots with mass market cars that apparently no one wanted, no matter how many were sold.  The lots were bulging.

What does that do to price?  What does that do for resale price?

As I say, do not overbuild capacity because there you are then, once again stuck with high overhead costs, being forced to build ever more vehicles that might not be sold, thereby manufacturing waste that looks like finished goods, but is really waste.

Really expensive waste.

http://www.theglobeandmail.com/news/national/canada-seen-benefiting-as-us-auto-makers-scramble-to-restore-capacity/article2425602/?utm_medium=Newsletter&utm_source=Business%20Ticker&utm_type=text&utm_content=Canada%20seen%20benefiting%20as%20U.S.%20auto%20makers%20scramble%20to%20restore%20capacity&utm_campaign=94826265