Chrysler Corp.'s willingness to raise prices for 1989 probably will mean all domestic car stickers will be about 3 percent higher overall, an industry analyst says.
A top executive at Mitsubishi said Japanese automakers will likely raise prices for 1989 as well.Ronald Glantz, analyst with Montgomery Securities Inc. in San Francisco, said Chrysler's lack of price increases over the past three years has helped hold down domestic prices.
Chrysler used aggressive pricing and buyer incentives this past year to increase its share of the U.S. vehicle market. Glantz said Ford Motor Co. and General Motors Corp. were forced to follow suit to defend their shares.
However, Bennett Bidwell, Chrysler's president for product and marketing, has said Chrysler is considering price increases of up to 3 percent for 1989 because generous rebates on top of low prices hurt its ability to make money on the cars and trucks it sells.
Glantz, speaking on the final day of the Automotive News World Congress, said such a move by Chrysler will allow GM and Ford to also increase prices from 1988 levels.
Chrysler also led the move by the Big Three in the past month to reduce the size of incentives. In late June, Chrysler announced it would allow the incentive campaign it has run through most of 1988 to expire shortly after the GM and Ford campaigns were due to expire.
Glantz also predicted that the exchange rate of the dollar will fall to 90 Japanese yen by 1990, forcing all Japanese automakers who want to sell cars in the United States to build them in this country. He warned that if the yen holds steady at 135 to the dollar for the near future, many Japanese automakers might not have to raise prices for 1989.
However, Richard Recchia, a top executive with Mitsubishi Motor Sales of America, said Japanese automakers including Mitsubishi will raise prices for 1989.
"If the yen stays at 135, then maybe the price increases will be smaller than already planned, but a price increase is definite for (Mitsubishi) and most Japanese automakers," said Recchia, MSA executive vice president.
Recchia also said that the strength of the yen against the dollar and the 25 percent import duty charged on Japanese trucks is hurting U.S. sales of Japanese compact pickups and will force out those Japanese automakers who don't find sources of the trucks outside Japan.
Mazda Motor Corp. President Norimasa Furuta said Tuesday that Mazda is talking with Ford about selling small Ford trucks through U.S. Mazda dealers. Nissan Motor Corp. assembles trucks in the United States and Toyota Motor Corp. is deciding whether to build a U.S. plant and investigating possible sites.