Payday Loans

Automotive News published the following on 13 June:
DETROIT — Chrysler LLC told dealers today that it will raise prices 2 percent for most remaining 2008 models. The increase will carry over to the 2009 model year. The price rise, which will be reflected in invoices starting June 16, was announced in a Webcast to dealers by Jim Press, Chrysler co-president, and Steven Landry, executive vice president of North America sales. The executives said increasing commodity prices, including steel, pushed the company to raise prices. Chrysler spokesman Stuart Schorr said: “The average 2 percent increase brings total model year price increases in line with key competitors. It does not affect vehicles already in dealer inventory. Incentives would not be changed. “The increase will affect the remaining 2008 vehicles Chrysler will make during its summer buildout. Press told dealers at the end of May Chrysler would build 127,000 units from July to mid-August. Schorr said that since the beginning of this model year Chrysler put in an average increase of $1,200 in content per vehicle without increasing prices. Automotive News has reported that steel prices for automakers have risen $500 a vehicle since January.

This is just the latest example of the automakers formerly known as The Big 3 showing their ignorance of basic supply and demand. Countless times over the last several years, they have increased their prices at the beginning and during their model years. They justify these increases to themselves and the press by saying 1. it’s only $75 or 2. it’s only 2% or 3. we added equipment valued at more than the price increase or 4. blah, blah, blah. They’ve done this so many times that they can actually say this with a straight face. Chrysler’s sales are down 19.3% this year (more than any other manufacturer). They’ve lost over 1.5 points of share, or 179,000 units. And that’s just through May! You might think, well, everybody know that truck sales are down, it’s just the trucks…wrong. Chrysler’s car sales are down too – more than any other manufacturer’s as well.

In what other reality would a rational company say, “Hmmm, sales are down – we should raise our prices!” Customers don’t give a damn about your costs. They want a great product at a price that represents value. Period. Don’t bore me with the details.

As always, I welcome your feedback. Well, maybe not welcome, but I don’t mind it too much.

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  1. Amen brother.

    I am certainly not a consistent advocate of higher taxation, but on this CAFE issue, I 100% agree that raising gasoline taxes would have been the right decision.

    I say ‘would have been’ because it would seem that the window of opportunity to effect consumer preference through such action may be gone – certainly in the short term, potentially forever.

    Yes, I am referring to fuel prices that are now averaging over $4/gallon. Look at what has happened to consumer purchase patterns and watch how the manufacturers are scrambling to realign their capacity. Shouldn’t the past 3-6 months of consumer behavior provide the nails in the CAFE coffin? How obvious should it be right now that CAFE did not work and there is a much more efficient solution?

    So if the jackasses in Washington really believe that the OEMs had teh technology to make Navigators and Escalades get 40mpg but were just being uncooperative and holding the technology back from the marketplace, I am sure they are very confused now as to why the OEMs still refuse to release the technology and would prefer to keep their businesses teetering on the edge of bankruptcy.

    So while America had the opportunity to tax the shit out of gasoline and invest the revenue into well thought out infrastructure projects, we didn’t take it and now we are paying the same prices that would have resulted from a tax, but we are depositing the money in OPEC’s coffers, instead of investing in America.

    I’m disgusted.

    Comment by Anonymous — 24 June 2008 @ 5:09 pm

  2. Wait just a cotton pickin’ minute.

    Are you saying that companies can’t just raise prices in the face of a volume decline? Blasphemy!!

    I dare you to find an economist to support that statement. Oh wait, they all do and the auto industry is just too stupid to realize it.

    Comment by Doug — 24 June 2008 @ 5:57 pm

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