Car Scrapping, Scale Economies And Fiat’s Goldilocks Principle

Car Scrapping, Scale Economies And Fiat’s Goldilocks Principle

Sergio Marchionne, Fiat’s Chief Executive Officer, famously averred that car companies need to sell 5.5 million vehicles a year, and one million units employing each platform, to keep their noses above water.

This is a bold and interesting statement because it gives a keen insight into the typical vehicle manufacturer’s calculus of long-term profit maximisation.

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