The Big 3 are in a profit bind because of high incentive costs, and most analysts say they can't relieve the pressure by raising prices.
True - and false. An Automotive News analysis finds that sticker prices of cars and light trucks in the U.S. market have gone up an average of $681, or 2.6 percent, during the 2003 model year.
The Big 3 have had 22 price increases this model year, and the result is an average sales-weighted increase of $938, or 3.6 percent. That's well above the current 2.2 percent annual rate of increase in the government's consumer price index.
The Chrysler group and Ford Motor Co. have had eight price increases apiece; General Motors has had six.
By corporations, the raises average $1,355, or 5.4 percent, for Chrysler and $911, or 3.2 percent, for GM. Ford has been a laggard; its increases average only $706, or 2.8 percent.
But the Big 3 continue to lose ground to their own generosity in the incentive arena- although the pain has been eased because the incentives are leading many buyers to add more high-profit options.
In the last two years, the three manufacturers have raised prices an average of $1,425 ($938 plus $487). Today's cash rebates generally are $2,500 to $4,000 for the Big 3. Two years ago, most of the givebacks were $500 to $1,500. It's a case of "the hurrier I go, the behinder I get."