Keeping a brake on car prices

September 24, 1982

Carmakers are applying the brake on price increases for 1983 - at least at the start of the new-model year.

After nearly a decade of boosting prices each year in a range from 4 to 7 percent, Detroit in the upcoming model year is keeping its average increase at 2 percent or below.

For trend-setter General Motors, the average boost is 1.9 percent.

Indeed, stickers on many - if not most - models, primarily slower-selling smaller cars, may not even budge. Because larger models have been selling at relatively brisker rates, they are expected to carry the brunt of upward '83 -model pricing.

In a show of some moderation, domestic auto manufacturers raised prices last fall less than 5 percent. General Motors and Ford Motor Company each posted 4.8 percent hikes, with Chrysler Corporation coming in with a 3.7 percent rise and American Motors at 3.8 percent.

All of these increases, of course, were on a ''comparably equipped'' basis, which means they appeared lower than if all equipment changes year to year were included. GM's actual '82-model boost, for example, was 6 percent after adjusting for equipment changes on its cars, such as making some previously optional items standard.

Sharp pencils at the ready, Detroit's pricing analysts are keeping the lid on most 1983-model base prices while attempting to wring out more profit from popular options or option groupings. This shouldn't be surprising, given the fact that US automakers have just come through 31/2 years of recession and, for the most part, huge losses.

There are numerous reasons, however, why car prices aren't rising much this fall:

* The long-standing argument that costs are rising does not hold water as a rationale for boosting prices. Each of the automakers won major concessions from hourly and salaried workers earlier this year, and suppliers have been holding prices under prior levels since the first quarter.

* Although there is some evidence buyers have become inured to sticker prices in the $8,000 to $10,000 range, sales remain at dismally low levels - hardly an atmosphere conducive to price increases.

* Having raised prices a year ago, automakers spent most of the year giving that - and more - back to buyers in the form of rebates, extended warranties, interest-rate subvention, and other incentives.

Even these ploys merely helped a deplorable situation in the marketplace from becoming intolerable.

* Evidence grows that interest rates will continue to fall, which Detroit generally interprets as the chief potential impetus for its long-awaited recovery. To raise prices just as a rebound is in the offing makes little sense because it could stall sales.

* Import competition, despite voluntary quotas by Japanese automakers on their exports to the United States, remains fierce.

Imports have increased their percentage of the total US market during most months this year, grabbing a record 31.7 percent share in July. Because the Japanese hold a major price advantage at the ''beginner-level,'' low end of the market, to increase prices in those segments would raise havoc with the US automakers' long-range hopes to shore up owner loyalties at the low-price end.

Perhaps the overriding consideration in holding the line on '83 prices lies in the fact that there is very little truly ''new'' coming at the outset. The only totally new US-built 1983 car is American Motors' subcompact Alliance, built in conjunction with France's Renault at AMC's Kenosha, Wis., assembly plant.

Chrysler ballyhoos its E-body midsize cars, but they are primarily stretched versions of its K-car, which head into their third year on the market.

Ford drops Granada and Monarch, replacing them with the down-sized and reskinned Ford LTD and Mercury Marquis, which are built on the same basic Granada-Monarch platform.

To properly confuse things, Ford keeps its old, larger LTD and Marquis models , adding the word ''Gran'' in front of each to distinguish them from the smaller newcomers.

GM has no really new models as the '83-model year begins, but a revamped Corvette is scheduled for early next year.

Staggered introductions have changed the entire structure of the fall model launch period - and may well alter pricing strategies as well.

With mostly carry-over models, Detroit is under no great pressure to lift sticker prices on '83s that are mainly look-alikes of their '82 antecedents.

But don't think that prices will remain static all year.

When new models show up periodically during the model year, as will be the case with the Corvette and Ford's restyled Thunderbird-Cougar and the all-new Tempo-Topaz compacts bowing in next spring, they start with a fesh sheet of paper in the pricing computer.