Newspaper article THE JOURNAL RECORD

New Car Prices Are Actually Falling -- for a Change

Newspaper article THE JOURNAL RECORD

New Car Prices Are Actually Falling -- for a Change

Article excerpt

Car and truck prices are falling, for the first time since the nation entered its current period of economic expansion in 1991.

The chief reason: the industry's excess production capacity, with automakers around the world turning out more vehicles than they can easily sell.

The chief beneficiary: the American consumer, who stands to get more car for less money as manufacturers cut suggested prices and offer rebates even on models that were just redesigned. "We're seeing an outright decline in average new car prices year- to-year," said David Littmann, senior economist at Comerica Bank in Detroit. "In August -- for the first time in the six and a half years of this business cycle expansion -- car prices dropped. And the declines will continue." Littmann said that the September figures, due out soon, were likely to show a larger drop. He also expects prices to decline further through next year. The average selling price for a new car in the United States has fallen back to about $19,000 after rising above $20,000 this year. And manufacturers are keeping their suggested list prices flat, or even cutting them. Ford is holding its average prices constant for the 1998 model year. Chrysler has reduced car and truck prices by 0.6 percent. General Motors raised prices by an average of 1.3 percent, its smallest increase in a decade. But GM's Saturn unit recently adjusted its 1998 prices and sent refunds of the difference to buyers who had already paid the higher prices. Saturn reduced the price of its SL1 sedan by $300. It raised the prices of its SL2 sedan, SW2 station wagon and SC2 coupe, but added air conditioning, normally a $950 option, as standard equipment, so that the cars cost less with comparable equipment. About 14,000 people who had paid higher prices for 1998 models received refunds of $300 to $960. Chevrolet also reduced prices for its 1998 Prizm, which has been completely redesigned and has more standard features. …

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