
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, October 2, 1993                   TAG: 9310020063
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE: DETROIT                                LENGTH: Medium

CAR PRICES UP JUST A TAD? REALLY?

Although the Big Three automakers say they are barely raising sticker prices for the 1994 model year that began Friday, consumers may do a double take when they start comparing.

General Motors, Chrysler and Ford say their prices are going up less than 2 percent, on average, on "comparably equipped" models. But analysts say the reality is that prices for their vehicles will rise an average of 5 percent from a year ago.

Detroit arithmetic does not count the cost of previously optional equipment that the Big Three have made standard. The car makers also use lower, end-of-model-year prices in their calculations.

Buyers will find 1994 models better equipped than ever. More than 60 percent of the new models come with dual airbags, says the Insurance Institute for Highway Safety. Nine of 10 new models carry antilock brakes.

But higher prices are likely to worsen the affordability problem that has been building for years. The average new-car transaction price - what the consumer pays, including options, taxes and dealer's fees - has been growing more rapidly than personal income for 20 years.

Today, the average car costs $18,044, or 26 weeks of the average family's earnings, up from 17.5 weeks in 1973, when the average car cost $4,032, according to the U.S. Commerce Department's Bureau of Economic Analysis. About two-thirds of the buying public now opts for used cars.

But the automakers say it is the transaction price - not the sticker price - that has grown - a reflection, they say, of consumers' taste for better-equipped, more-luxurious models.

"If people's tastes switched from ground chuck to filet mignon, would you characterize that as an increase in the average price of meat?" asked Joel Pitcoff, Ford's research manager.

After customers requested air conditioning on 98 percent of Berettas sold last year, GM made it standard equipment for the new model year, explained Patrick Campbell, GM's finance director of North American sales and marketing. The comparably equipped price comparison is a better reflection, he said, of what people really spend to buy the car.

by CNB