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Selling only to the super rich

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In the first quarter of 2007, General Motors made 2.26 million vehicles for a net profit of $62 million.  That's $27.43 profit on each vehicle.

General Motors hasn't realized the enormous potential of selling only to the super rich.  What GM should do is lay off all but a few, say about 15-20, of the most highly skilled employees and give them the task of building just one car a year.  Allow a cost of $1 million to build the car.  Then put the car up for sale at $63 million.  They'd still make a profit of $62 million.

There are enough super rich fools in the world that there will always be some of them who will pay whatever it takes to own the only model car of the year built by General Motors.

Why go to all the time, trouble and effort to make 2.26 million vehicles when you can make the same profit by making just one?

The reason GM can be sure to sell the car at that price is that the top ten highest priced works of art in the world sold for an average of about $100 million.  When there are enough people in the world who will pay that much for a unique picture to hang on the wall, there will be enough of them who will also pay that kind of money for a unique car, the only one of its kind.

The airlines are in terrible shape, at risk of going out of business.  What they should do is get together and divide up the routes to the most glamorous destinations.  Then, each airline makes just one round trip to that destination a year.  One airline takes New York to London, another takes New York to Paris, another Los Angeles to Tokyo, another New York to Los Angeles, and so on.

They figure out how much profit they would expect to make on the operation of their entire fleet per year, divide that number by the number of seats on one airplane, set that figure as the airfare for the trip, and get rid of the rest of the fleet.  They make the same amount of profit on that one flight that they would have made making thousands of flights at a negligible profit, or none at all, per flight.

There would be super rich people lined up to buy tickets for those flights, so they could brag about being the only people making the only flight that year to that destination.  No matter what it costs.

ExxonMobil could do the same thing with gasoline.  Shut down all but one small refinery, sell just one year's supply of gas to a super rich Hummer driver, who'll pay whatever takes, so that he can drive around giving the rest of us the finger while we stand and watch.

It's surprising that the auto makers, the airlines and the oil companies haven't figured out that there are enough super rich fools in the world that will pay whatever it takes to own the only thing in the world of it's kind.  For the prestige, the bragging rights and the proof of superiority.  And the proof of foolishness.

 

Ed Martin is an ordinary person who is recovering from being badly over-educated. Born in the middle of the Great Depression, he is not affiliated with nor a member of any political, social or religious organization. He is especially interested in (more...)
 

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