U.S. and foreign auto makers are using a strong sellers' market to boost prices on many 1985 cars.
The price increases on individual models range from less than 1 percent to as much as 10 percent over comparably equipped 1984 cars.
That means overall 1985 car prices could wind up 5 percent higher than those charged for last year's models, some industry analysts say.
"New-car prices for 1985 probably will be up 5 percent or more over 1984 levels. But that won't really cause sticker shock, because most of the increases are concentrated at the high end of the market," said David Healy, an analyst with New York-based Drexel Burnham Lambert Inc.
Still, that forecast is different from the one Healy and other analysts offered last Oct. 1 at the beginning of the 1985-model year.
They said then that increases in 1985-model prices would match or fall below the average 4 percent rise in the Consumer Price Index -- a measurement of changes in prices of goods and services purchased by moderate-income families.
But those early price predictions were set awry by continued strong demand -- especially for mid-size, sports, luxury and big cars -- and by new, multibillion-dollar labor agreements at General Motors Corp. and Ford Motor Co. Other price-boosting factors include strikes last year against GM facilities in the United States and Canada, the continuation of quotas on Japanese auto imports, and the year-round introduction of new products, industry analysts say.
"Our studies show that production costs usually are the main reasons for new-car price increases. But the current increases seem to be driven more by consumer demand," said George Hoffer, an economist and auto industry analyst at Virginia Commonwealth University in Richmond.
For example, production costs for U.S. manufacturers have risen 1.26 percent since last September. But that increase is more than offset by current pricing activity, Hoffer said. On the other hand, consumer demand is still riding high, he said.
U.S. customers bought 14.6 million domestic and foreign cars and trucks in 1984 -- about 4 million more than they purchased in 1982, the low point of the last recession. All auto makers doing business in the United States will sell about 15 million cars and trucks this year, according to Detroit-based Ward's Auto World, an industry trade publication.
The nation's auto makers traditionally have raised prices in boom periods, particularly on their best-selling lines, Hoffer said. Prices tend to come down when sales slow, he said.
"I'm not being critical of the auto companies. We all tend to take whatever the market will bear, both in salaries and in profits," Hoffer said. "There's nothing wrong with that."
Auto makers are raising prices on their best-selling models. GM, the nation's largest car company, is an example. GM put in two price boosts so far this model year, raising its average new-car price by about 4.6 percent, or roughly $588 a car.
"Average" prices include the lowest-priced product and the highest, and they are affected by myriad circumstances, including the business of mandating as standard equipment those things once sold as optional accessories.
GM's Chevrolet Cavalier subcompact was the best-selling passenger car in the United States last year at a manufacturer's suggested retail price of $6,469 for a base 2-door coupe. GM has raised that price by 6.2 percent, to $6,872 for the 1985 model. But company officials argue that the percentage increase should be lower because the new price includes $111 in "new" standard (formerly optional) equipment.
GM's Chevrolet Corvette is up 6.6 percent with a 1985 base manufacturer's suggested retail price of $24,891, compared with $23,346 charged last year.
Ford Motor Co., Chrysler Corp. and American Motors Corp., GM's three home-grown competitors, all have put into effect relatively moderate average price increases. Ford prices are up 1.3 percent, or about $153 a car. Chrysler is up 1.2 percent, or about $125 a car; and AMC has raised the prices on its popular Jeeps by 1.2 percent, or $200 a unit. AMC earlier had boosted its Alliance and Encore compact car prices by 2.3 percent, but the company has backed away from that hike because of slow sales in those lines.
Chrysler is holding the line on prices of its small cars, such as the Plymouth Horizon, Turismo and Reliant models; and Ford is rolling back prices on some of its comparable models. But both Ford and Chrysler are raising prices on their hot-selling products. Ford, for example, is boosting the price of its Thunderbird by 5.3 percent, from a 1984 closing price of $9,736 to a 1985 introductory price of $10,249.
Some of the most aggressive pricing activity is found on Japanese cars, whose numbers in the United States have been restricted by import quotas in effect since March 1981. Toyota Motor Corp.'s top-line Cressida passenger car is a case in point.
A 4-door sedan Cressida with 5-speed manual transmission carried a closing 1984 manufacturer's suggested retail price of $14,259. Toyota is introducing essentially the same car this year at a price of $15,690 -- up 10 percent over the final 1984 price.