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. Last Updated: 07/27/2016

Automobile Prices Hold Steady in '98

DETROIT -- Nearly every autumn, automakers could be counted on to roll out next year's models, and nearly every autumn they raised prices.


Not this year.


The new models are on their way to showrooms, with sticker prices that look a lot like last year's. In some cases, the new cars are actually cheaper.


On Wednesday, Chrysler Corp., the last of the Big Three to announce 1998 model prices, said the prices would on average be six-tenths of 1 percent lower than those of comparably equipped 1997 models.


Earlier this month, Ford Motor Co. said its prices would stay essentially unchanged while General Motors Corp. announced modest price increases that average 1.3 percent.


Automakers are feeling the pressure of intense competition and spotty sales. As consumer prices are rising at an annual rate of 2.3 percent for the last 12 months, the prices automakers are charging dealers for new cars has fallen, on average, 1.6 percent.


"We're in a bidding war to see who can come out with the lowest price increases,'' said Nicholas Colas, an auto analyst with Credit Suisse First Boston in New York.


Just as shoppers seem unwilling to buy new clothes unless they are on sale, they are apparently unwilling to buy a new car unless they get a good deal.


"The car business is becoming like many other consumer goods businesses,'' said John Casesa, an auto analyst with Schroder & Co. "Customers are demanding and getting more car for less in each model year.''


Analysts sense a change in attitude among auto executives.


"They recognize that cars have gotten too expensive,'' said Colas. "A lot of consumers feel cars have gotten out of their reach.''


Chrysler said it would cut car prices by 1.3 percent for comparably equipped 1998 models while it would trim prices for its more popular Jeeps, minivans and pickup trucks by four-tenths of 1 percent on average. Chrysler has not yet announced prices for its all-new vehicles, the 1998 Dodge Durango sport utility and the redesigned Chrysler Concorde and Dodge Intrepid sedans.


Not all 1998 models are cheaper than the 1997 models they replaced; some cost less and some cost more, and some have equipment changes that make comparisons difficult. To calculate its average prices, Chrysler used a sales-weighted comparison of comparably equipped models.


For instance, a 1998 Plymouth Breeze costs $15,210, which is $150 less than the same car cost a year ago.


One of Chrysler's most popular minivans, the Dodge Grand Caravan SE, carries a base price of $22,865, up from $21,335 the year before, and the 1997 Grand Caravan cost $22,700, $165 less than the comparably equipped 1998 model.


With the auto market nearly flat for several years, many companies have turned to cost-cutting to improve sales and profits. Chrysler's recent efforts have been widespread. It has reduced product development times, increased factory efficiency and pressed its suppliers to work more efficiently and cut their prices.