Even with the cash-for-clunkers program in full effect, demand for new automobiles is the lowest it's been in years. This has heightened competition among automakers, who are being forced to both improve their products and discount their prices. Consumers in the market for a new 2010 vehicle may be treated to a discount.
Toyota Motor (NYSE: TM), for example, plans to introduce a less expensive Prius, and the 2010 Nissan (OTC: NSANY) Sentra will see its sticker price drop by anywhere from $130 to $1,080, based on the features the buyer opts for. Other vehicles that will hit the showroom floors at a discount include the Mercedes-Benz E350 mid sized sedan and the Lexus RX 350, discounted by $3,300 and $700, respectively.
And where does General Motors fit in to this strategy? Well, the beleaguered American automaker is cutting prices, but it is also cutting some corners. The 2010 Chevy Equinox will be $1,825 cheaper but the base model will come with a four-cylinder engine instead of the six-cylinder version in last year's model. And the Cadillac SRX will reportedly be priced $7,080 less but will also be smaller in size.
Now the question that remains to be answered is ... will these price cuts work? That is, will they attract enough additional business to make up for the loss in profit? Also, will the reduced sticker price also reduce a would-be car buyer's negotiating leverage at the dealership? And who is in the market for brand-new vehicles these days, anyway? I've got my eye on a Vespa.
Beth works for The Options News Network (www.ONN.tv), which provides daily stock and options commentary. The above comments are not intended as trading advice.
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