Automobile sales have been slower than in the past, with many companies offering rebates, discounts, and...

Automobile sales have been slower than in the past, with many companies offering rebates, discounts, and low financing. Find information online about why companies are lowering prices. Is the demand for automobiles elastic, unitary elastic, or inelastic?

Expert Solution

After the decrease in fuel price there was a boon in automobile market and automobile manufacturer started producing more automobile then earlier they’re producing more cars than demanded and therefore their inventory is increasing and they want to clear their inventory, so they are giving discount. Automobile manufacturer are also facing competition from 2^nd hand automobile market . after 2008 recession, drivers held on to their cars for longer than usual, meaning that there were fewer used vehicles on the market and price increased.At this point of time used car is also dumped in a market for resale. Costlier loan had also slowing down the automobile market. Due to all these reasons demand in automobile sector is low and dealers are giving discount to increase demand. demand for automobile is comparatively elastic because when prices fall or with discount it tempts the people to buy new cars

Rahul Sunny answered 1 year ago

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Automobile sales have been slower than in the past, with many companies offering rebates, discounts, and...

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