Many automobile dealers have an operating pattern similar to that of City Motors. Each month, City initially aims at a unit volume quota that approximates a break-even point. Until the break-even point is reached, City has a policy of relatively lofty pricing, whereby the “minimum deal must contain a sufficiently high markup to ensure a contribution to profit of no less than $400. After the break-even point is attained, City tends to quote lower prices for the rest of the month.
What is your opinion of this policy? As a prospective customer, how would you react to this policy?
