State Of The Automotive Market — Why Are VW Lowering Their Prices?

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To many, the automotive market is a complex and currently down-spiraling market. As an onlooker, it’s hard to get a good understanding just what is going on when auto manufacturers slash their prices. Is the company in financial trouble or is it just a competitive move meant to strengthen the brands position in a specific branch of the market? When it comes to Volkswagen there are several reasons why, and we are going to look at some of them in this article.

VW are forever finding a mid-range price niche between the likes of Ford and Audi, yet they don’t quite cater for the high-end market. Although the manufacturers are a step up from the everyday motoring brands, it seems they may be edging further towards the middle end of the market with a series of alluring price cuts. This is especially true in India where the government have removed excise duty and the cars are selling at less than two-thirds of their previous value. VW have appeared keen to pass these savings on as they look to harness the growing power of the Indian middle classes.

The new VW Passat highlights the company’s interesting price structure. Whereas cars like the Polo are ultra-competitive in price, the Passat is perhaps looking to compete more with luxury brands like BMW and Audi giving VW a nice market span.

The Passat will probably be a shade more expensive than the likes of the Vauxhall Inisignia, Skoda Octavia and the ever impressive Ford Mondeo, so it needs to be a very solid car to justify its market position. This would appear to be the case with a fine selection of diesel engines beginning with a hearty 1.6, before finding form in a 2.0 turbo diesel.

There’ll also be a Bluemotion edition as we’ve come to expect from VW, as well as a hugely powerful 238bhp twin-turbocharged four-cylinder option. The latter is certainly a statement of intent about exactly which market the Passat wants to fit into and when you start comparing prices with the top end of the market, the Passat looks like an enticing deal.

The new plug-in Hybrid Golf GTE also announced prices and possibly making this the most appealing car of all the new VW range offering huge economy and immense practicality – the price tag is also a seller after you deduct the government’s plug-in car grant.

The new Hybrid Golf GTE achieves a phenomenal 166mpg further reducing costs and putting the buyer in real quandary whether to buy the Audi A3 e-tron, which achieves an even more impressive 176mpg, for an extra £2,000.

Hybrids cars seem like a wonderfully practical option for the modern motorist and a route that is way underexplored by the manufacturers. When a car achieves 176mpg, the buyer can rightfully start thinking about cutting their fuel costs to a third of what they were, and once this is factored into the price, the hybrids begin to look like a very good deal.

The State Of The Automotive Market — VW Lowering Prices

VW Why Lower Prices

VW Why Lower Prices

IMAGES: [REUTERS] [INAUTONEWS]

Bit Rebels

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“To the moon!” Survey shows Bitcoin enthusiasts remain hopeful as ever that prices will rise

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Bitcoin to the moon

To the moon!

It’s become the preferred rallying cry of bitcoin’s faithful. When prices were rising throughout the second half of 2013, crypto-anarchists and speculators were having the slogan printed on t-shirts and coffee mugs, while creating and sharing an endless stream of digital memes across message boards and forums. There were predictions of $ 10,000 and $ 100,000 bitcoin prices within the decade.

With prices falling, slowly but steadily throughout 2014 (and, now, into 2015) the cheers were less confident, but no less exuberant. With each exclamation, bitcoin believers seemed to be saying, buy now while prices are artificially low because this wont last forever. Doubling down, they’d say, was the only smart move.

So the question is, what is sentiment like today with prices ($ 236) being at their most depressed levels in 15 months?

Asset management startup Hedgeable is attempting to answer that with a public survey asking people to estimate the one-year, two-year, and three-year bitcoin price. The company has divided the respondents into five categories: Bitcoin Enthusiast, Investor, Trader, Entrepreneur, and Media. The company writes:

Our bitcoin estimator allows the wisdom of the crowds to decide what the price of bitcoin will be over the next 1, 2, and 3 years. As part of Hedgeable’s mission to provide sophisticated investing solutions to all investors, we are committed to offering the most robust bitcoin research and investing solutions.

With an (admittedly limited) total of 155 votes cast, the consensus prices returned by the survey are that bitcoin will climb back to a price of $ 450 in one year, $ 800 in two years, and $ 1,852 in three years.

To the moon!

It’s worth mentioning that the survey has seen the most respondents from the enthusiast category, at 72 votes, followed by entrepreneurs at 50, traders at 12, media at 12, and investors at 9

Perhaps it’s not surprising, given the inherent biases, that enthusiasts have already submitted two votes for a price of “$ 10,000+” over a one year time horizon, four votes for two years, and seven votes for three years among the enthusiast category. Entrepreneurs have been slightly more conservative, on average, with just two predicting that prices would reach five-figures within three years, and a handful more predicting that it would reach $ 3,000 to $ 5,000 over that same period. Only one trader and one member of the media have bet on a price of $ 10,000 or more, both predicting it would take three years to achieve. No investors have been this bullish, with the most aggressive predictions being $ 2,000 in two years and $ 3,000 in three years.

While the prevailing sentiment seems to be positive, there were some predicting doomsday scenarios. For example, one enthusiast predicts a price of less than $ 50 within three years. Two others predicted it would be less than $ 200. Two entrepreneurs predict sub-$ 50 prices, one within two years and the other within three years. Investors are holding to a much narrower band with their predictions, with each believing that bitcoin would remain above $ 300 on the low-end, over the next three years. Similarly, the most bearish prediction from traders is a price range of $ 100 to $ 150 in one year, and $ 200 to $ 250 in two years.

If anything this data seems to indicate that professional investors and traders are more moderate in their predictions, indicating that bitcoin prices will neither rise nor fall to extreme levels in coming years. Entrepreneurs and enthusiasts, who some might describe as unsophisticated, appear to be far more emotional with their predictions.

Speaking to the significance of assembling this sort of data, Hedgeable CEO Mike Kane tells me via email:

It is important because there is no place to get sentiment about bitcoin. Because it’s such a nascent space, everyone is looking for opinions from experts on what the price will be, yet nobody has ever aggregated that data. We will be putting out periodic studies with analysis on this data, and as we get more data we will be able to track how sentiment is changing from different stakeholders, geographies, etc. This will help investors, entrepreneurs, and VCs, as they judge the potential for bitcoin. Bitcoin is still a very small community, and the data is quite fragmented and not easy to consume for the average person.

Avid bitcoin venture investor Marc Andreessen* offered perhaps the most articulate assessment of the state of bitcoin prices beginning the year in one of his infamous tweetstorms. He noted, among other things, that price volatility was part of the system design and necessary for its early growth. Moreover, Andreessen argued that many of the most interesting applications for bitcoin and its underlying blockchain are price and volatility independent:

As we have seen over the last 18 months, bitcoin prices can move wildly both on the back of significant industry news and macroeconomic factors and when driven purely by emotions market momentum. The reality is that none of the above respondents knows where bitcoin is headed. But as has come to be expected, the consensus in the community at large seems to be that bitcoin prices will rise over time.

Have you bought your digital treasure?

Submit your vote and see the real-tim Hedgeable bitcoin price estimates below:

(*Disclosure: Marc Andreessen is an investor in Pando.)

[Image via Sofamax]

PandoDaily

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