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Automakers Get Set to Play Latest Round of Rebate Game

August 25, 2003

It's August, and once again carmakers' thoughts are turning to raising prices, according to the Wall Street Journal. With 2004 models starting to roll into showrooms, most of the

major automakers appear ready to play the latest round of a very old game, the Journal said.

In September 2002, for example, the Power Information Network, an affiliate of market-research firm J.D. Power & Associates that

specializes in harvesting vehicle-transaction pricing data from several thousand dealerships nationwide, show the average cash rebate offered to consumers was $2,027 a vehicle. In October, that amount dropped to $1,849 -- a decline of $178, or 8.8 percent.

The fall pricing game is one that automakers play even though recent history suggests many customers know fall is a good time to admire the new designs, but not necessarily to buy them. The savvy of the U.S. public is shown in the Power Information Network data: As surely as cash rebates fall in October and November, by

the first quarter the spending is on the way back up.

"There is every fall a dip that occurs at the rebate level and total spending per unit on discounts," says Power Information Network's Tom Libby. But Libby predicts the deals will have to be reloaded after a short time. GM, he

says, wants to push its market share for the year to at least par with 2002. That will take some doing, as GM's share through the end of July is 27.6 percent, compared with 28.5% during the first seven months of 2002, according to the Journal.

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