PRICING POLICIES IN THE AUTOMOBILE INDUSTRY.

The article examines the risk inherent in determining price in the automobile industry, focusing on the experience at the General Motors Company (GMC). The article explains that car prices are set by the manufacturer or "administered" prior to product release and maintained throughout the year. The article discusses the complex factors that determine price, including financing, engineering, design, production, and marketing. The author holds that manufacturers must set prices between two levels, the lowest being the price of production, and the higher being the amount purchasers are willing to pay for the article. Specific discussion of the GMC process for determining price based on standard volume and standard price is presented.