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Carmakers forced to raise prices

Carmakers forced to raise prices

Alex Kaufmann March 20th, 2008 Alex Kaufmann By Alex Kaufmann Author March 20th, 2008
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December 31st, 1969 We could be in store for a sharp rise in vehicle prices as carmakers are forced to deal with unfavorable exchange rates, rising raw material prices and new fuel-economy and emissions regulations. These factors are increasing cost pressures on carmakers and it appears the burden will likely be passed on to consumers. GM has confirmed that it’s considering raising its prices to offset these cost pressures. Speaking with Automotive News, GM CFO Ray Young said the carmaker is looking at applying price increases on some products. "We'll be aggressive in our pricing. At end of December we increased prices in the U.S. by 1.5% on average for our vehicles to offset some of the increase in commodity prices," Young noted. GM’s vice chairman Bob Lutz has made no secret of the fact consumers will have to pay much more for cars because of new fuel-economy and emissions regulations. In fact, he’s previously stated that America’s new CAFE laws could add $6,000 to the price of a car. He also stated that it's impossible to build small cars and sell them at a profit at current prices, which means you can guarantee car prices will be seeing a sharp rise in the near future.
Carmakers forced to raise prices

Carmakers forced to raise prices

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We could be in store for a sharp rise in vehicle prices as carmakers are forced to deal with unfavorable exchange rates, rising raw material prices and new fuel-economy and emissions regulations. These factors are increasing cost pressures on carmakers and it appears the burden will likely be passed on to consumers.

GM has confirmed that it’s considering raising its prices to offset these cost pressures. Speaking with Automotive News, GM CFO Ray Young said the carmaker is looking at applying price increases on some products. "We'll be aggressive in our pricing. At end of December we increased prices in the U.S. by 1.5% on average for our vehicles to offset some of the increase in commodity prices," Young noted.

GM’s vice chairman Bob Lutz has made no secret of the fact consumers will have to pay much more for cars because of new fuel-economy and emissions regulations. In fact, he’s previously stated that America’s new CAFE laws could add $6,000 to the price of a car. He also stated that it's impossible to build small cars and sell them at a profit at current prices, which means you can guarantee car prices will be seeing a sharp rise in the near future.

Tags: Industry, General Motors

Posted in: News


Comments (13 total)

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  1. By germandude #1, Posted: 3/20/2008

    Isn't improving the fuel economy what they should have been doing all along? Instead they waste all the R&D money on stupid unnecessary toys, and then charge more for their cars... real crooks if you ask me. Maybe they should start their quest for greener cars by not mounting a V8 in every single car they build.

  2. By CK #2, Posted: 3/20/2008

    Oh my god! Many cars are still a bargain in the US from a european point of view. Live here and pay our prices. Then you know what is expensive.

  3. By bambam #3, Posted: 3/20/2008

    what an excuse just to raise car prices. Fuel-economy and emissions regulations don't effect car prices. please tell me how? thats not involving R & D.
    I can see now that the Chinese will take over if GM keep this going, thank god for the Japanese are still here.

  4. By Gus #4, Posted: 3/20/2008

    It's amazing how many people have no clue about economics, yet still spout off every chance they get.

  5. By Ayax #5, Posted: 3/21/2008

    Its a vicious circle... combined with a certain degree of greed.
    Raise fuel = raising everything that comes after that, even a new car that will then continue to spend fuel...

  6. By Raj #6, Posted: 3/21/2008

    I have a friend in US and he tells me that car prices are not that bad in America, so a little increase in price may not hurt you Americans that much... :)

  7. By Sir Yappie #7, Posted: 3/21/2008

    you need to have an inrease in prices of cars....for the same HSV Ute that is going o tbe released there it is about 30,000 less than what we pay.Same for the sedan (G8)...and we build the bloody thing....

  8. By Gus #8, Posted: 3/21/2008

    The reason we pay less is taxes and collusion.
    Our government doesn't screw us as badly as the European tax gobblers, and the huge spread of dealers keeps prices low.
    Don't like it? Don't elect tax hikers.

  9. By Johnny #9, Posted: 3/22/2008

    Thats not the only reason Gus. The UAW is another reason some of the domestics aren't putting much money into R&D, they've got too much going out the door in pension money. I've worked in a unionized environment, and I found that many slackers hid behind the unions. I think that if there was more of a threat to people's jobs by not being unionized, they would work better and decrease the costs of quality control.

  10. By Sir Yappie #10, Posted: 3/24/2008

    Gus...Australia makes the G8 and the ute that is being idolised by so many americans....not the europeans

  11. By C6 Owner #11, Posted: 4/23/2008

    Idolized? I have not seen one G8 on the road and the Ute won't even make it here until 2010. Too bad the interior of the G8 (even the top-line GXP 6.2 liter LS3 motor) doesn't have the same quality materials as my brother's GTO (Monara for you Aussies).

  12. By C6 Owner #12, Posted: 4/23/2008

    Correction:-Monaro

  13. By C6 Owner #13, Posted: 4/23/2008

    By the way, BOTH Gus AND Johnny are 100% correct.
    -Outside of the U.S. other governments with their monsterous taxes prevent people from enjoying decent cars at decent prices.
    -The communist unions that dominate American auto plants are full of slackers and their greed drive up costs, while driving down quality control.

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