GM to raise prices by $1,000 in '09

DETROIT — General Motors Corp. told dealers Monday it plans to raise prices on 2009 models by an average of 3.5 percent despite a tough market that is forcing the automaker to cut production and discount its 2008 models.

Mark LaNeve, GM's vice president of North American sales, said in conference calls to dealers that the increases will allow GM to recover only part of the rising cost of steel and other commodities and the cost of safety and other features on the new models. The increases will amount to about $1,000 a vehicle.

GM already had increased the prices of its 2008 model year vehicles twice because of rising commodity costs, spokesman John McDonald said. The move follows Chrysler LLC's announcement of a 2 percent increase in the price of its remaining 2008 vehicles.

GM also said Monday it will further cut SUV and truck production, and it will run a sale June 24-30 to help clear out high inventories of 2008 pickups, sport utility vehicles and larger cars. The sale includes zero percent financing for as long as 72 months.

”We're really just trying to spark the market at the end of the quarter,“ LaNeve said.

GM shares fell 88 cents, or 6.4 percent, to close at $12.91 after declining to $12.75 earlier in the day. That was the lowest they'd been since February 1982, when they hit $12.70 a share, according to the University of Chicago's Center for Research in Security Prices.

Declining sales have sparked an internal review of GM's Hummer brand, which is saddled with a gas-guzzling image. LaNeve said Monday that GM hired Citibank to assist in that review, including weighing any potential bids or licensing agreements. But he wouldn't say whether any potential buyers have come forward.

GM said Monday it will cut shifts, reduce assembly-line speeds and temporarily idle seven factories: Janesville, Wis.; Oshawa, Ontario; Silao, Mexico; Arlington, Texas; Moraine, Ohio; Fort Wayne, Ind.; and Shreveport, La.