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Carmakers forced to raise prices

Business Materials 21 March 2008 05:53 (UTC +04:00)
Carmakers forced to raise prices

( MA ) - We could be in store for a sharp rise in vehicle prices as carmakers are forced to deal with unfavorable exchange rates, rising raw material prices and new fuel-economy and emissions regulations. These factors are increasing cost pressures on carmakers and it appears the burden will likely be passed on to consumers.

GM has confirmed that it's considering raising its prices to offset these cost pressures. Speaking with Automotive News, GM CFO Ray Young said the carmaker is looking at applying price increases on some products. "We'll be aggressive in our pricing. At end of December we increased prices in the U.S. by 1.5% on average for our vehicles to offset some of the increase in commodity prices," Young noted.

GM's vice chairman Bob Lutz has made no secret of the fact consumers will have to pay much more for cars because of new fuel-economy and emissions regulations. In fact, he's previously stated that America's new CAFE laws could add $6,000 to the price of a car. He also stated that it's impossible to build small cars and sell them at a profit at current prices, which means you can guarantee car prices will be seeing a sharp rise in the near future.

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