Summary
The news article that I have chosen to do my blog on was written by blog Dave Hall of the Canwest News Service, and deals with the inventory change for Canadian and American car dealerships. Across Canada the sting of rising gas costs can be felt, but especially in the Auto Industry. With the recent highs in gas prices dealerships have noticed less interest in gas guzzling trucks and a larger interest in smaller vehicles, which has forced dealerships to buy less trucks and buy more smaller cars. This 'sting' can mainly be felt in the U.S. according to auto analyst Dennis DesRosiers as he stated "that 60% of Canadians drive fuel efficient cars while only 30% of Americans drive fuel efficient cars. This shift from expensive to less expensive has been evident in U.S. auto manufactures and also in the Canadian auto manufactures. For instance the closing of the Oshawa truck plant. Unless dealorships change their ways they will be destined to fail. (http://autos.canada.com/news/story.html?id=a218e082-d7e7-4e07-bb7f-041548a87efc)
Connection
This news article connects with inventory in two ways, first by COGS and secondly by expenses. Mainly less inventory, purchases and depreciation. Car dealerships that keep their gas guzzling trucks will see a decrease in purchases, an increase in less inventory and an increase in deprecation expense. But on the other hand if car dealerships listen to consumer demands they will see an increase in purchases, a decrease in less inventory and a decrease in deprecation expense. In conclusion if the dealership stays with the old ways Gross Profit and net earnings will decrease but if they go with the new way Gross Profit and net earnings will increase.
This news article connects with inventory in two ways, first by COGS and secondly by expenses. Mainly less inventory, purchases and depreciation. Car dealerships that keep their gas guzzling trucks will see a decrease in purchases, an increase in less inventory and an increase in deprecation expense. But on the other hand if car dealerships listen to consumer demands they will see an increase in purchases, a decrease in less inventory and a decrease in deprecation expense. In conclusion if the dealership stays with the old ways Gross Profit and net earnings will decrease but if they go with the new way Gross Profit and net earnings will increase.
Reflection
Firstly this article is a great stepping stone in the demolishing humanities exploitation of non-renewable and thus global warming. Now back to business this article shows us how a business and an accountant need to keep up with the times (global issues) and also consumer demands. If a business or accountant doesn't keep with times and consumers there will be tons of problems with no solutions. But if a business or accountant does the opposite of what I mentioned in the last sentence they will have fewer problems and solutions. Or in other words in with the new and out with the old.
3 comments:
Students our age are gradually getting their driver licenses, so this topic offers a great connection. With graduation and post-secondary school just around the corner, students in grade twelve can’t resist the urge to ask their parents for a vehicle as a graduation gift. That trail of thought proved to be true in previous years, but now with the rapid rise in oil costs, students and parents are thinking twice before purchasing an automobile. I agree with your point that the Auto Industry is suffering tremendously, mainly because citizens are realizing the high cost of gasoline. Having alternatives such as the Smart Car and other fuel efficient cars give the consumers more choices, which results in a decline in sales of large trucks that devour oil hastily. Being on the Robotics Team at our school, General Motors has been our main sponsor for the past few years. But because of the significant decrease in sales which we can witness on the stock market, GM is hesitant when it comes to the sponsorship. So with the soaring gas prices, everyone is affected somewhat negatively.
K. Li
As Karen said, students who have just got their N are eager to have possession of a car. But because of the soaring gas prices, students, including their parents since the money is highly coming from them, have to think twice before purchasing a vehicle. Also, since technology is constantly progressing, there are more varieties of cars out in the auto industry such as the smart cars and the fuel saving ones. If car dealerships want to make a profit, especially during this downslide in economy, they should watch out for the depression of cars that are sitting in their parking lots, waiting to be sold. A change of type of cars would be a good idea, like GM and their gas-guzzling trucks.
M.Man
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