Auto Makers' Firmer Pricing Risks Denting Sector's Recovery

[Robbien]

Source: WSJ

Auto sales are slumping, yet on dealer lots across the country, customers are paying more.

The phenomenon -- sales down, prices up -- is based on a long-term strategy to charge customers more for their vehicles, especially as the major auto companies seek profitability on lower overall volumes. Soon auto makers also will be forced to pass along to consumers a good portion of the rising regulatory costs for meeting more-stringent fuel-economy standards.

But if they push too hard on prices, car companies risk stunting the sector's recovery.

Firm pricing may have worked for the auto industry when a sales level of 16 million cars and trucks a year in the U.S. was considered normal; now the annual-sales rate is less than 10 million. Meanwhile, the average sticker price, the average transaction price -- typically lower because of incentives -- and the average monthly payment are generally at their highest points since 2002.

Read more: http://online.wsj.com/article/SB124804747175963749.html?mod=googlenews_wsj

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Nice strategy, charge customers more for their cars.

[caseymoz]

1. Recovery? What recovery?

There isn't going to be a recovery. Too many people are bankrupt, have otherwise wrecked credit, and/or are unemployed. It doesn't matter at this point if they charge $10,000 or $20,000.

[notesdev]

2. Returning to normal pricing

Once you shake the funky financing out of the system, that's what they cost to make and sell. One of many realities pleasantly yet temporarily avoided by swimming in a massive credit bubble.

[Duckhunter935]

3. Just stck to one low price, no haggleing

[RBInMaine]

4. Supply and demand eventually kicks in. If they don't sell and stay red, they adjust. Just hang on.

[2Design]

5. There is not a single car worth over 10,000 - they are all over priced n/t