For the second model year in a row, General Motors, Ford Motor Co. and Chrysler Corp. showed considerable restraint in pricing their new cars for introduction day. The price restraint acknowledges - although automakers would never admit it - that they had been pricing themselves out of the market with their annual increases.
Nonetheless, car prices may still be too high. After two years of minimal price changes, 1999 domestic cars still carry customer rebates of $500 to $2,000. Ford Motor reduced sticker prices $1,000 on its 1999 Ford Taurus and Mercury Sable sedans; nevertheless, Ford is paying rebates of $500 on those models.
Much of the price action has shifted to trucks, the darlings of today's market. Automotive News estimates that the 1999 truck hikes averaged less than 2 percent.
The laws of supply and demand make it attractive to raise the prices of hot-selling models. But the makers should be aware that buyer backlash on overpriced trucks likely will be just as brutal as the buyer backlash on overpriced cars.
Soon there will be a tough, new kid on the block in the top-volume segment of the truck market - full-sized pickups. The Toyota Tundra is scheduled to go on sale next May, and Toyota is a fierce competitor in every class it enters - which means a price war in the big pickup field could be only months away.
Last year, after showing restraint at introduction, GM, Ford and Chrysler embarked on a quiet, mid-model-year pricing spree that added an average of $116 to GM prices, $155 to Ford prices and $183 to Chrysler prices. Sadly, the mid-model upswing already has begun on 1999 vehicles.
Sales are still strong, but makers must remember that too many price hikes can choke the golden goose.