Auto companies search for Goldilocks pricing point

The major auto makers have found themselves in a bit of a dilemma.

They've been offering discounts in order to clear an increasing amount of unsold inventory in the U.S., which in January reached the highest level since August 2009.

However, the industry wants to avoid getting sucked into the kind of price wars that have caused so much trouble in the past.

Production cuts are not on the agenda at the moment.


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  • Tdot
    , contributor
    Comments (9364) | Send Message
    At present the automakers are "playing their own game" individually against the course (the marketplace), not so much trying to take established market share from each other, in trying to maximize their individual profits. This means using restraint in using discounts and incentives to try to move product. The unusually brutal winter weather has really been difficult for dealerships, never mind the auto factories, and they are trying to pull forward some of the inevitable spring rush once the weather breaks, and to keep the bills paid. That is fundamentally different from the old price wars where the automakers were playing chicken in trying to buy each others' market share. They will cut production only if it appears that the spring thaw does not bring in those that have deferred their purchases, and that there won't be any "catching up" back to the 16M or so that they are counting on.
    12 Feb 2014, 05:25 AM Reply Like
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