Tags: Price War May Break Out in Auto Market

Price War May Break Out in Auto Market

Tuesday, 18 Feb 2014 09:09 AM

Several automakers, including Ford, General Motors, Toyota and Honda, have begun offering discounts on some of their models in what could mark the opening salvo in a price war.

U.S. auto sales fell 3.1 percent in January, and the slump may owe to more than bad weather, CNBC.com reports. Auto dealers are stuck with a growing supply of cars and may have to boost rebates and other incentives to sell them.

Some in the auto industry are worried that a price war will arise just like the one that damaged companies' earnings several years ago, according to CNBC.com.

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"Rising inventory levels combined with several more waves of bad weather will result in a short-term spike in incentives," Eric Lyman, vice president of editorial and consulting for ALG (the Automotive Leasing Guide), told the news service.

"The danger is that this could be the beginning of an escalating arms race for market share."

The average price paid for an auto after discounts totaled $29,882 in January, down 3 percent from December. ALG predicts that incentives will rise up to 15 percent to 20 percent longer term, CNBC.com reports.

After automakers blamed the wicked winter weather for their weak January sales, Larry Dominique, executive vice president at industry researcher TrueCar, told Reuters, "The weather's an easy scapegoat. It will be interesting to watch February and March to see if those lost sales in January get made up."

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Several automakers, including Ford, General Motors, Toyota and Honda, have begun offering discounts on some of their models in what could mark the opening salvo in a price war.
Price War May Break Out in Auto Market
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2014-09-18
Tuesday, 18 Feb 2014 09:09 AM
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