Incentives Are 'Inevitable
June 06, 2008: 04:57 PM EST
DETROIT -(Dow Jones)- Chrysler LLC President Jim Press believes auto makers will need to boost incentives this year as they deal with slumping demand caused by high fuel prices and a weak economy, as well as the added costs associated with surging raw-material prices.
"It is inevitable from our standpoint because we have pricing pressure in terms of cost from steel and plastic," Press said during an interview with Dow Jones Newswires. "Incentives will be a key part but the focus will shift on those products that are facing the headwinds, such as trucks and SUVs, rather than those benefiting from the tailwind like cars."
It is wrong to use incentives to create business," he said. "They need to be used tactically on those products where there is an inventory imbalance to temporarily make them more attractive to get some volume."
Chrysler's average incentive per vehicle sold in the U.S. in May was $3,714, the highest figure among the six top-selling auto makers for the month, according to Edmunds.com.
LINK:Chrysler President Press Says Incentives Are 'Inevitable'
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