[DKing]

Let's see, what does this do to the market?

Hhmm, okay, Shelby has an alternative source of cars for his aluminum CSX4000's other than Kirkham, so this puts him in to a position to leverage more aggressive pricing from Kirkham. This can be used to increase profitability ( by lower costs) or increase volume (lower market prices for you and me).

Or, Shelby could have a cheaper source than Kirkham, and shop elsewhere. Then Kirkham loses a portion of their volume. This means that Kirkham's fixed costs are spread over fewer cars, resulting in lower profit margin per car. To remedy this, Kirkham will need to sell more cars (or reduce costs) to acheive the same level of profit. Increasing volume comes from a strong marketing campaign, or by lowering market prices. Strong marketing only goes so far. Either way, Kirkham's costs go up, either through increased spending on marketing, or higher fixed costs.

Hhmm, so Shelby negotiates a lower cost from his manufacturers, and Kirkham increases volume to maintain profitability. Both are duking it out for the same market share, trying to increase the market from the currently price-insensitive aluminum Cobra buyer by expanding the market into the realm of the price sensitive buyer that is currently playing in the new or used fiberglass Cobra market (CSX or replica).

So, if Shelby isn't gaining the market share he's after (with the subsequent profit), he can price his aluminum car closer to the price of a Kirkham to shift some potential Kirkham buyers over to Shelby. Kirkham, faced with this attack, might not want to lose these buyers and may lower price to keep them, AND/OR, may decide that some of those potential SPF or ERA customers look pretty tasty, and retarget their pricing to capture some of this market.

Of course, people that already own Cobras and want to sell them face a new market where their used Cobras no longer command the resale value they once had because you can get a new one at a lower price than before.

All of this is good news for the consumer, who is in the market for a Cobra, be it CSX or replica. However, if you own one already, aside from an original which will hold it's value as such for a purist collector, this is likely to have a negative impact on the resale value of your Cobra. This statement is true for any CSX4000 or replica alike.

The big question is this: Is Shelby seeking to increase profit by expanding his market and increasing volume (lowering market prices), or is he seeking to increase profitability by achieving lower costs?

If I were the Kirkhams, I'd be breaking out my Game Theory textbook and start formulating alternate war strategies based upon what I think Shelby is up to. I'd also be looking at the loss of Shelby's business and what impact that would have on my production, costs, and profitability.

Oh, and let's spare the air of the whiney-butt Shelby-bashing (I can hear it coming). This is capitalism in action. Nothing wrong with being aggressive in your market.