Chrysler Plans Small Price Increase on Its '91 Models

From Associated Press

Chrysler Corp.'s 1991 cars, Jeeps and minivans will cost a modest 0.9% more than this year's vehicles, a smaller increase than is expected by the other two Big Three auto makers, an executive said Thursday.

But Chrysler wants to wean buyers from such incentives as cash rebates and low-interest financing that have added more than $1,000 to the company's cost for each of its cars and trucks.

Last week, Ford Motor Co. said average prices for its 1991 cars would be 3.2% higher than current models. Prices for Ford's 1991 trucks will rise an average of 3.6%.

General Motors Corp. has not released prices for the full line of its 1991 vehicles.

Chrysler will lower by $1,100 the sticker price on the Dodge Monaco LE. The Dodge Dynasty will cost $560 more than this year.

All the comparisons involve comparably equipped vehicles. Popular optional equipment on one model year's vehicles often is included as standard equipment on later models. That boosts the price and makes year-to-year comparisons difficult.

Also muddying year-to-year comparisons is padding the auto maker builds into prices for incentives.

"We've allowed allowances for rebates and incentives in the '91 prices," Chrysler Motors Chairman Bennett Bidwell said Thursday. "We would hope to de-escalate the use of incentives."

"We're trying to put ourselves in a very competitive price position versus the rest of the industry to increase our market share," Bidwell said.

However, he added, "No one, certainly not Chrysler, is going to turn this parade around."

During the past several years, each of the Big Three has offered a variety of incentives, mostly cash rebates and low-interest financing, to help sell its vehicles.

The cost of incentives comes directly out of profits. During the past two weeks, each of the Big Three has blamed incentives for driving down their second-quarter earnings.

Chrysler reported it made $180 million during the period, 47.2% less than last year. Chairman Lee A. Iacocca said profit would have been up if Chrysler had avoided paying consumers to buy cars and trucks.

GM, which reported a 40% profit decline, and Ford, whose profit fell 45%, said they also were hurt by the cost of incentives, as well as by economic problems in Brazil.

GM won't say precisely how much it spent on incentives during the quarter. Ford put its average cost at $1,050 per vehicle.

Like its competitors, Chrysler boosted prices on its 1990 models earlier this year. Chrysler's tentative prices announced Thursday were 1.3% higher than 1990 prices before the earlier increase.

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