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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: mishedlo who wrote (7522)	2/10/2004 11:38:46 AM
From: Silver Super Bull	Read Replies (1) of 110194

Mish, RE: "Tell me they can pass on rate hikes. I dare you." I don't argue with your arguments on auto pricing...however, I think that one needs to separate what GM (and Ford) are doing vs. the rest of the industry. GM and Ford have been seriously discounting (and offering generous financing) in order to sell cars. The strong foreign automakers have been doing must less so. Nonetheless, I think the average car price has been creeping up. To get a nice (not great) car now one will have to pay, minimally, in the high 20s. As far as passing on increased material costs, how can they not?? As JW just pointed out, in aggregate the domestic automakers aren't making any money on car ops right now. One way they may try to absorb the increased raw material prices (as well as some other raging cost increases such as health care) is to cheapen the vehicle...of course a flawed strategy but it has happened before. DB

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