Costs decline; prices rise: Why?

To the Editor:

I find it amazing that Toyota can reduce prices of the 2002 Camry by 3 percent to 7 percent while General Motors raises prices on the dying Oldsmobile Intrigue by as much as $1,100.

I cannot understand why automakers raise prices year after year while they constantly pressure suppliers for price cuts of 2 percent, 3 percent and 5 percent. If 60 percent of the car's cost is material and that cost is falling every year, why are car prices rising?

My advice to domestic automakers is to cut prices wherever they can. The $2,000 to $5,000 rebates are not good for the used-car market or for the resale value of new cars.

DaimlerChrysler appears to be on the right track by demanding that everyone agree to concessions. That is apparent in the $2,000 price cut on the 2002 Grand Cherokee and the price hold-down on the 2002 Dodge Ram pickup.

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