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Partly Correct on Rising Car Prices
February 4, 2008

GM Expects Car-Price Rise - WSJ.com

GM is raising prices:

"In December, GM raised its prices an average of 1.5%..."

This is great news if you're an employee, stockholder, or fan of General Motors. This means market demand is strong for products and overproduction has been curtailed (they're not dumping as much product on rental car fleets and they have some hot products).

The rest of the sentence I originally quoted read:

"In December, GM raised its prices an average of 1.5%, mainly because of higher raw-materials costs, especially nonferrous metals, steel and oil."

No, no, no. That is such a tired excuse, "our costs went up, so we have to pass it along." GM raised prices because they can, because the market will accept that (or they think it will). It's just so politically increase to say you're increasing prices because of increased demand, isn't it? They're not entitled to raise prices because of steel costs or elective costs, such as investments in new technologies...

"[CFO] Fritz Henderson said the industry has less manufacturing capacity than in the past and therefore less pressure to sell vehicles cheaply to move inventory."

It's all about supply and demand. I'm sure GM realizes that... they just can't say it, right?

Posted by Mark Graban on February 4, 2008 | Comments (0)