The Wall Street Journal reports that Chrysler is bumping-up list prices on their new Chrysler, Dodge and Jeep vehicles by two percent, effective June 16th. I fail to see the point when dealers are slapping cash on the hood in ever higher piles amidst a crash in demand. Not to mention the fact that Chrysler has yet to announce their much-ballyhooed across-the-board-model cuts. The official justification for the price hike: "[Chrysler spokesman Stuart] Schorr said at the beginning of this model year Chrysler put in an average increase of $1,200 in content per vehicle without raising prices," Automotive News [sub] reports. Just in case you were thinking Schorr was referring to significantly upgraded interiors, "the executives said increasing commodity prices, including steel, pushed the company to raise prices." Yes, well, you have to wonder just how many more 2008 Chrysler products are going to come out of the factories between June 16th and the start of 2009 model year production. This all seems like a bizarre going-through-the-motions exercise, perhaps intended to convince a future buyer that Chrysler is what's commonly referred to as a "going concern." Tick tock.
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GM and Chrysler are fond of this little game where they gradually bump up both prices and rebates, until the rebates get so high that they announce a new strategy of “value pricing” and cut both prices and rebates. Over and over.
Ford does the same thing. In the Focus buying frenzy last month, we were put in a position of trying to explain why 2 identical cars had different sticker prices – Ford has raised prices several times since last fall.
So do all the Japanese, Korean and European brands. The only difference I see between Chrysler and virtually everyone else is that Chrysler will likely not remain in it’s current form within the next 18 months.
It’s inevitable. With the rising price of steel and all, Chrysler has to raise prices so they can maintain their profitability and abundant cash flow needed to continue developing exciting and technologically advanced products. You get what you pay for, I always say.
Chrysler will find it does not have the market power to force a price increase.
It may be that steel went up. So what- the wages of Americans have not. This makes it even harder for them to afford a Chrysler.
About the only strategy left to Chrysler is exactly to compete on price.
On domestic vehicles, does anyone even pay attention to what MSRP is anymore? Glancing through the papers yesterday I found advertisements for anything from $5,000 to $10,000 off MSRP after discounts and rebates. The sales and pricing model is completely broken when this is going on. Against that backdrop, a 2% price increase is an absurdity.
Several weeks ago Saturday Night Live did a news skit about the bump from $0.41 to $0.42 for a first class stamp. They “reported” the big oil said: “a penny, oh that’s cute”. 2% price changes in MSRP strike me the same way.
This is a play on entitlements. They feel entitled to pass their costs along, despite the fact customer demand controls price in the end.
Of course when sales retreat they can say “look, we made just as much selling fewer cars!” until the market share problem comes up again.
I hate to break it to Chrysler that consumer demand is what sets the price of a vehicle in an open market. They can put any sticker on it they want but it won’t alter the transaction price.
Ha ha. They can’t even sell the ton of cars on the dealers lots at the super discount prices they have now, raising the price isn’t going to bring more people into the dealer. More and more they don’t look like they’re interested in selling cars(which is good because they can barely give them away) and just want to piss everyone off. I personally could care less if it costs them more to sell their uncompetative cars they should have structured their business better. Doesn’t matter if you raise the price on a product if no one wants it to begin with.