Now you're starting to catch on! There are more ways to compete than racing your competitors to the lowest price to see who goes bankrupt first. A competent businessman will differentiate his product into a separate market segment from the rest so he doesn't have to compete on low price (selling his car for the price of a Hyundai). That's why Toyota formed Lexus, and Honda formed Acura.
No, I have fully understood for a long time. You, however seem not to understand at all.
You brought up cars and tried to compare a low end vehicle to a luxury automobile. 50 cent hot dogs and filet mignon served at the finest restaurant are both foods, but they might as well be on different planets because of the market they appeal to.
There is a perceived value in that luxury automobile for those who buy them -- it's worth it. But the Hyundai buyer will merely acknowledge or assume a greater value, but will not spend the money because it isn't worth it to HIM.
When tax costs are legally removed, if the retailer tries to retain them to make a higher profit, he will only be successful to those limited few who percieve that value. For those who don't, there will be plenty of retailers who will have dropped their prices.
It seems that your fears and the projection of that fear is guiding you, not reason, facts, and experience.