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

DATE: THURSDAY, June 2, 1994                   TAG: 9406030084
SECTION: BUSINESS                    PAGE: C-8   EDITION: METRO 
SOURCE: By WARREN BROWN THE WASHINGTON POST
DATELINE:                                 LENGTH: Medium

DON'T LOOK FOR HOT PRICES ON THE HOTTEST NEW CARS

Take the Chevrolet Camaro. When the 1994 model was introduced last fall, it carried a base price of $13,399. By Jan. 10 this year, that price had risen to $13,499. On May 9, the price went up $250 to $13,749.

Yet the sporty Camaro and its companion Pontiac Firebird continue to sell at a brisk pace. Current sales are almost four times what they were in 1993.

So what's going on here?

Partly, it's the end of recession. People are buying cars again, and that's creating high demand, which is leading to higher prices. Partly, it's manufacturers such as General Motors Corp. scrambling to find money and ways to expand production. And partly it's shifting exchange rates putting pressure on Japanese companies to raise prices.

``We're having the opposite side of the problem that we had two years ago, when we were shutting down plants because we couldn't sell enough cars,'' said John F. Maciarz, GM's marketing spokesman. ``Now our demand is so high, we can't build enough cars and trucks.''

Since Oct. 1, 1993 - the beginning of the 1994 model year - Japanese auto prices have risen an average of $991, or 5.8 percent, over what they were for comparable 1993 models, according to the latest pricing survey by Automotive News, a Detroit-based industry trade journal.

By comparison, prices for GM, Ford Motor Co. and Chrysler Corp. have risen an average $416, or 2.2 percent.

Yet the Japanese share of the car and truck market in the United States for the first four months of this year stood at 23.1 percent, up 0.2 of a percentage point from its 1993 level. Domestic auto companies held a 74.2 percent share, down 0.6 percentage point, according to figures compiled by Autofacts Early Warning Report, another industry trade journal.

``That sort of pokes a hole in the argument that higher prices necessarily mean lower market share,'' said Joel Pitcoff, an industry analyst for Ford. ``In spite of their higher prices [and] our increases in quality, in spite of the fact that more Americans are beginning to buy our cars, the Japanese are still making gains; and we're not taking them lightly.''

However, some analysts have argued that U.S. automakers could gain more share if they absolutely held the line on prices or lowered them. But that conventional wisdom assumes the U.S. companies have enough capacity to meet even existing demand for their products, said Chrysler spokeswoman Karen Stewart.

Chrysler is losing sales and chances to increase market share, largely because it is having a hard time building all the cars people want to buy, Stewart said.

Chrysler's much-in-demand Neon car is an example. The company has a backlog of about 35,000 orders for the subcompact, Chrysler officials said.

Chrysler so far has raised its 1994 car and truck prices an average of $389, 2 percent higher than they were last year. But, as is becoming common with Japanese and U.S. car manufacturers, those increases came in steps - an average of $244 in October 1993 and mini-raises totaling an average of $145 since then. The strategy is to avoid turning off consumers with one big price jump, Stewart said.

``People tend to deal with price increases much better if you keep the increases moderate and spread them out over time,'' she said.

Consumers still will be able to find bargains in what has become a seller's market, industry officials said. But those bargains most likely will be found on slower-selling models.

Also, a best-seller in one community may be a dud in another, where the price might therefore be lower, some industry officials said.