One of the fundamental concepts of economics is supply and demand. With this concept, you can maximize the profits of your company by creating equilibriums.

Production and inventory are your supply. Demand is the sum of your sales and missed sales.

You control production unless you have enabled AutoProduction. Sometimes random events may cause a decrease in production. But for the most part, you control vehicle supply.

Two factors can change demand: pricing and availability. Increasing the price of a model will reduce demand, whereas decreasing the price will increase demand. Opening new dealerships and branches in new markets will increase availability, thus increasing demand. Closing branches has the opposite effect.

Ideally, you want production to match demand. This is equilibrium.

Let's look at some in game situations that you might find yourself in. And how you should approach supply and demand to maximize your profits.

Too much supply sounds like an easy problem. Cut production and be done with it. However, there is usually a better way to go about it. Ideally, you would have all your factories operating at 100% capacity with no missed sales. By doing this, you're minimizing your costs per unit while not wasting money overproducing the model.

Take, for instance, the start of the game. You'll have a factory that can produce 100 units a month. But with your first model, you might only sell 10 units a month. Instead of cutting production down to 10 units, it would be wiser to increase demand for the model. That way, you are utilizing your spare factory production at full capacity. So how do you increase the demand for a model? There are two ways to go about it. You can decrease the costs of the vehicle, or you can open new branches. When cutting costs, you need to determine if the additional units sold at the new price will generate more revenues and more profits than producing fewer, more expensive units. If you have not yet expanded your company to new locations, this sometimes is a better option, as you will grow the population pool of customers you can sell to.

However, if you have more than one model and those units have too much demand, increasing the demand of the underperforming unit might not be the best idea. Instead, you may be better off reducing productions to match demand while using the excess production capacity to meet the needs of the other models.