As Auto Incentives Head Higher, So Do Prices
Some automakers attempting to lure buyers with record incentives are raising prices at the same time, according to USA Today.
General Motors Corp. has raised prices on most vehicles six times since the start of the 2003 model year last fall, while Ford Motor and Chrysler Group have increased prices eight
times, the national newspaper reported.
Automakers usually set prices in the fall, then discount in late spring and summer, but some have raised prices since January nearly
simultaneously with incentive increases, USA Today said.
Most import automakers haven't raised prices as steadily, although South Korea's Kia increased the price of the Sorento SUV by $745 and destination charges by $145 while raising incentives by $1,077, according to the paper.
Paul Ballew, GM's top sales analyst, says the constant juggling of prices and incentives is done so the automaker can pull in people who are debating whether to buy a new car while
maximizing revenue. One of the benefits of incentives, he says, is that it gives people cash to finance a more expensive car.
Spokesman James Kenyon says Chrysler isn't happy about the incentive/pricing situation.
"We think rebating this high is destructive to the business, but we have to react to both pricing and incentives in a very tough, competitive environment," he says, according to
USA Today.
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