General Motors has agreed to temper future price increases on its 1980 model cars to offset violations of President Carter's wage guidelines in its new contract with the United Auto Workers, the White House announced yesterday.
Alfred Kahn, chairman of the Council on Wage and Price Stability, said that as a result of the price agreement General Motors was now in compliance with the president's anti-inflation program. GM said it was "pleased."
At the same time, Kahn said the council had finally concluded that last year's national trucking agreement with the Teamsters union also was out of compliance with the government's anti-inflation guidelines. Administration officials said no action would be taken against either the Teamsters or the trucking industry.
The GM decision does not mean the automaker will be barred from raising its 1980 prices. The company has simply agreed not to raise its prices any more in 1980 than it has in each of the last two years.
A council spokesman explained that if General Motors had raised its prices 10 percent last year, it could not raise its prices any higher than 10 percent on its 1980 cars. The council would not reveal the amount of price increase GM was allowed last year. GM said there was no one available yesterday to provide that information.
Under the agreement, GM would be able to exceed the price formula if it "experiences substantially greater increases in costs that it can reasonably foresee at the present time." GM officials said yesterday, however, that the company would have to notify the government before it took such action.
Kahn called the GM agreement another "demonstration of that corporation's continuing support for the president's anti-inflation program." He said the agreement was a "genuine concession."
The president's chief anti-inflation fighter said the cost of the UAW settlement was "considerably lower" than the 30 percent to 35 percent estimates that were made outside the government at the time the agreement was reached.
Kahn said the corporation had used a different accounting method for determining pension costs than allowed by the government, which underestimated the cost of the contract.
In addition, Kahn said the government was assuming a 6 percent inflation rate in calculating the cost of the cost-of-living allowance in the new UAW contract. He admitted that "public reports understandably have used much higher estimates of inflation in estimating the cost of the agreement."