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Carmakers ease sticker shock
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September 16, 1998: 8:34 a.m. ET
GM launches incentive blitz while rivals slash prices on 1999 models
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NEW YORK (CNNfn) - Waning consumer confidence, driven by world market volatility, appears to be fueling an automotive price war as manufacturers strive to pump up lackluster sales and move inventories off the lots.
According to reports, automakers are adding new features to their 1999 lines even as they discount their sticker prices, some by as much as $5,000.
Mazda, for example, is selling its 1999 Millenia S model for just over $31,000 - down $5,500 from the 1998 price. Mazda also cut the price on its 626 LX-V6 sedan
At the same time, Acura's new 1999 TL 3.2 is going for $27,950, down more than $5,000 from 1998.
Other car makers that have slashed their next-year model prices include Ford Motor, which cut prices on its Taurus and F-150 pick-up, and Chrysler, which lowered the price for its redesigned and feature-loaded Jeep Grand Cherokee.
Audi reportedly has left its pricing as is, but increased the number of bells and whistles.
Part of the price reductions is due to cost-cutting efforts among manufacturers. Some, however, likely result from stagnating sales at the dealerships.
Lower-than-expected car sales were largely responsible for an overall drop in retail sales last month, following the settlement of two strikes at General Motors Corp.
Auto sales during the month fell 0.2 percent to $53.9 billion, compared with a more dramatic 4.1-percent slide in July, when the 54-day GM strike ended.
Consumer confidence last month also slipped for a second straight month, as concerns over the economic crisis plaguing overseas markets continued to grow. A drop in the consumer confidence index indicates shoppers are keeping a tighter reign on their spending.
The index hasn't fallen for two consecutive months since September and October of 1996.
Still recovering from the punishing labor strike, GM said Tuesday it is launching a full-scale marketing and incentives campaign to reclaim its position as the nation's leading automaker.
The company said it will offer customers cash rebates of up to $3,000 or financing at less than 1 percent.
GM posted a 37 percent drop in U.S. vehicle sales in July, losing its No. 1 ranking to Ford Motor Co.
Analysts say the sales blitz may trigger further price reductions among GM's rivals, which look to the Detroit automaker as a pricing barometer, according to reports.
Shares of GM (GM) were off 9/16 Tuesday at 58-7/8 on the New York Stock Exchange. 
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