You'll being paying more for '84-model full-size cars
Planning to buy an '84-model car in the fall? If it's a big car, figure on paying a lot more money for it than if you buy an '83-model today.
While the domestic auto industry is expected to hold the price on small, fuel-efficient models, which haven't been selling very well anyway, it can be expected to dig deeper into the pocketbooks of the well-heeled buyers of the full-size and luxury cars now moving at a swift pace.
''I expect to see price increases run from zero to 10 percent on the '84 -model cars,'' predicts Arvid Jouppi, an auto analyst based in Detroit.
''The highest-priced cars, the kind that the most affluent consumers are reaching for these days, will go up as much as 10 percent.''
The Chrysler Corporation has already told dealers they can expect no change in the price of its new Dodge Omni/Plymouth Horizon Charger/Turismo subcompacts, except, the automaker explains, ''for equipment adjustments.'' Further, the third-ranked domestic carmaker says it is limiting any price rise on ''typically fleet-equipped'' Dodge Aries and Plymouth Reliant K-car compacts to no more than 1.4 percent.
At this writing, other carmakers have yet to act.
The domestic auto industry is wary of stopping the slow recovery that has been under way for the past year.
To increase profits, however, without raising prices, the industry may try to tamper with, or even drop, some of the concessions, such as below-market interest rates. But if the sales pace slows, the incentives will go back fast. Car buyers have grown to expect special deals over the last few years.
The 90-month boom-to-bust cycle began in January, 1975, and ended a year ago when the automobile business began to turn back up. Thus, rebates, in some form or another, have been around for 8 1/2 years, much to the distress of the car manufacturers.
Customers want to be wooed, says one industry onlooker.
Mid-June auto sales for the first time in many years boosted the sales rate to above normal. In the middle 10 days of the month, domestic car sales were running at an annualized rate of 8.2 million, plus 2.2 million imports, making a total of 10.4 million.
''The normal demand for now,'' says Mr. Jouppi, ''is 10.2 million.''
That pace, however, cannot be expected to continue. Last year Detroit automakers sold 5.8 million new cars. Jouppi expects a million cars more than that to go out the door in '83, or a total domestic market of 6.8 million.
''I also expect another million additional domestic car sales in 1984,'' he adds.
Mid-June domestic sales rose 71.8 percent from the bottom of the auto depression a year ago. General Motors was up 77.6 percent, followed by Ford at 60.8 percent; American Motors, 78 percent; and Chrysler, 60.1 percent.
How long will the auto recovery last? Analyst Jouppi looks for ''at least 36 months of growth, and possibly even 42 months.'' That brings the industry up to 1985.
''I would think that the 1986-model year is a very precarious one,'' he asserts. ''We could have another down cycle at that time.''
Meanwhile, Detroit carmakers are rushing new models into the showrooms as soon as they're ready, trying to deflect any thrusts by the imports. Ford Motor Company, for example, has just come out with its new 1984-model compacts, the Ford Tempo/Mercury Topaz.
The American auto industry's biggest strength is perhaps its flexibility - the ability to meet the market wherever it goes. The Japanese are far less flexible in this area. Too, Detroit is investing money in new products and plants as if the supply were without limit.
The big problems, now that recovery is clearly under way, are quality and price.
While the quality of American-built cars has gone up sharply in the last few years, the perception of many buyers has failed to keep pace. Many potential car buyers still see Detroit-built cars as far inferior to the import competition. Domestic car executives readily grant that the problem exists and say it may take a long time to correct it.
Clearly, Detroit has the message and is holding back on introducing new car lines ''till they're ready,'' according to Roger Smith, GM chairman. The big carmaker, for example, is delaying the launch of its high-luxury replacements for the Cadillac Fleetwood and the Buick and Oldsmobile equivalents as it held up the new Chevrolet Corvette.
The second negative for Detroit is price. Simply, the cars have become too expensive, asserts Jouppi, among others, ''and many people balk at paying the high prices that the manufacturers ask.''
Incentive programs, such as low-interest loans, are an attempt to rebalance the equation.
Even so, the outlook for Detroit is clearly on the rise. The latest Automotive News World Outlook (a quarterly service of Data Resources Inc., Lexington, Mass., and Automotive News, the weekly trade journal) expects the US auto industry to again become the world's leading auto producer by 1986.
The Japanese took over the top spot in 1980.
