GM Says it Will Raise Prices 3.5% for 2009 Models

On top of today’s bad-news-for-GM move of resorting to fire sales to move product, when 2009 models hit lots they’ll sport higher MSRPs thanks to an average 3.5% price hike. The company points to increased content for the hike, but most experts add that a weak dollar and increased costs of materials might also be to blame.

Most 2009-model-year GM cars and trucks start going on sale later this summer. Many of the cars and trucks feature new six-speed automatic transmissions we’ve discussed previously.

Comments

Sounds like an incentive ploy to get you to buy 08's now.

Sounds like inflation. How could anyone expect prices to not rise when the cost of everything has gone up in the last year? A lot!

Eggs up 18% in a year.

If that was true computers would cost over $5,000. What you are seeing is GM's inability to shave costs while increasing quality. Lexus perfected this type of manufacturing having learned it from a 'borrowed' Renault executive in the late 80's. Unfortunately Renualt had the concept but they couldn't execute on it due to their company culture. Since then Toyota and Honda have instituted it with great success. That's why the Japanese are able to bring out newer cars with more content at higher quality with minimal or no price increase.

JR,
Japanese car companies are not immune to escalating costs. They too raise their prices annually and with new model releases. They were better at controlling their price while offering higher content but that was when the currency exchange greatly favored the yen. Now that the dollar is so weak, they are having to pass on their higher costs to the consumer.

The weak dollar does not impact the price of Japanese vehicles since most are produced in North America. Most vehicles go up about $200 to $300 a year. But a 3.5% increase on a $25k car is closer to $900. There just trying to make up for their truck and suv losses.

I don't know the exact figures but a significant number of vehicles are still imported each year from Japan and that number continues to grow. And even those which are assembled here still source parts from Japan. Regardless of assembly location, commodity prices have skyrocketed and any company cannot continue to absorb these higher prices for steel, plastics, etc. without raising their prices. GM may be the first to raise prices across the board but will not be the last.

Keith,
JR did not write that Japanese car companies are immune to escalating cost increases. He wrote that Japanese car companies provide you with additional value in return for any cost increase. Geez, reading comprehension must not be taught in public school any more.

Ben

Um...toyota raises their car prices about 1-2% every year, no matter if they add content or not. As does almost every other manufacturer.

We report on that all the time.

Surprisingly you only see a price drop when a car is redesigned because the automaker can streamline the production or find cheaper parts.

Dave,
I worked as a Discrete Manufacturing Analyst on W-st for eleven years and can't ever recall a case of Toyota, Honda or Nissan raising the cost basis of any of their vehicles without adding content and/or improvements. For many years NVH improvements were the most common, but they are also expensive to implement. I don't ever recall seeing that cost being passed along to the consumer.

The near future will have customers paying more for new cars due to increasing prices of steel, said CEO of Nissan, Carlos Ghosn, at a shareholder meeting in Japan on Wednesday. Ghosn, who also heads Renault, Nissan’s partner, points out the practice will be industry-wide, as raw materials affect all manufacturers.

And Ben, thanks for the feedback...I'll see if I can find my Rainbow Reading Series books...apparently I've got a lot to learn still.