9/30/2005

05 Mustang, you want one?

What happens when demand exceeds supply? You get a shortage of the product. This is what is happening with the new 2005/2006 model of the Ford Mustang. Ford can't keep up with consumer's demand for the newly designed muscle car. With the new found demand for the Mustang, Ford will increase Mustang production to 192,000 in 2005 – 80,000 more than in 2004. An article on the Ford Mustang states that nearly one out of every two sports cars sold in U.S. is a Mustang. Demand for this extremely hot car is higher than any other car in production today. With demand being as high as it is, would Ford have legitimate cause in raising the prices of the Mustang? If not, then the market for reselling the Mustang for a premium arises. Maybe keeping production the same and raising the prices could increase revenue for Ford making the Mustang a true classic. But then again, you have to look at all the lost sales that could have resulted with increased production. When people want that V8 power that comes from the GT Mustang, they are willing to pay a hefty price. How high are they willing to go?

7 comments:

sara said...

Remember who published this article. Ford motor company media dempartment wrote this article and they have a biased opionon. I have a hard time believing that 1 out of every 2 sports cars is a mustang. That number seems a little inflated. If the car is in such high, the price has not increased, and the quantity has not increase wouldn't that mean that you could buy a new mustang drive it for a year and then sell it for more then you bought it for. Something doesn't seem right about this situation.

Logan said...

I don't want an "05 Mustang, but I do want a older mustang. One that is two-toned, dark and light grey, kind of like the one that is sometimes parked in the library parking lot or at the Mandalay apartments. Do you know where I can find one of these? Just curious! And Destiny, I think that you have got a great idea! Don't make more if the demand is so high, at least not in the short-run, raise the price and rake in the dough!

ethan said...

Just wait until the 2007 Shelby GT 500 comes out. There are going to be car lots full of traded in 2005 Mustangs. You won't be able to get one of those for months after they come out. I think that as Ford comes out with more old style cars they will raise the prices. I think they are testing the market to see if it will be profitable.

Dr. Tufte said...

-1 on Sara's comment for a spelling error.

-1 on Logan's comment for a spelling error.

I may be wrong, but my understanding is that Ford won't be able to jack up prices too much. Most of that is done at the dealer level.

I think Sara raised a very interesting point.

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carter said...

Dr. Tufte said that Ford won't be able to jack up prices too much. But if they could do you think there would be a market for the more expensive product?

Dr. Tufte said...

Not in May 2008.