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Car prices shouldn't rise much

When Jeff Plauche recently bought a Honda Accord, his first new car in years, what mattered most wasn't its smooth styling, zippy performance or safety features.

"I wanted a good car for $350 a month," said Plauche, 36. "That was all."If the monthly payment had been $375 or $400, Plauche said, he would have balked. "I just would have said I could do without some of the options," even though he wanted the car, could have afforded the extra amount and was even dealing with his car-salesman brother.

"Cars are just a tool with me," said Plauche "There are other things I would rather spend money on."

Automakers are hearing that more and more these days. At a time when sales growth is expected to be minimal and competition among automakers is pitched, new cars have slipped in priority and status in many consumer surveys.

The result: Prices for new vehicles are under intense pressure and likely to remain more or less flat for a while to come, some auto industry authorities say.

"Let's put it like this: The consumer will benefit from rather stable pricing over the next few years, and it will be paid for by cost-cutting and better business practices," said Ray Windecker, a veteran Detroit marketing analyst who runs a research firm called American Autodatum.

"The manufacturers have no choice."

For decades, consumers consistently spent about 11 percent of their disposable income on transportation, according to federal statistics. But in the past two years, that has dropped to 8 percent, spurred in part by new vehicles' declining status and increased competition from other products for consumers' dollars, some analysts say.

The industry is getting the message. After a decade in which new-vehicle prices increased an average of 5.4 percent a year, the price of the typical 1998 model vehicle will remain unchanged or increase only slightly, manufacturers say.

Ford's average new-vehicle price isn't being raised at all, Chrysler's is going up 0.6 percent, and General Motors' average is rising an average of 1.3 percent.

By some measurements, new vehicles are already more affordable than they've been in 16 years - consumer grumbles notwithstanding. During the second quarter of 1997, the cost of a new car was the equivalent of 21.8 weeks of average income - the lowest since 1981, when it was 20.7 weeks.

That number probably will continue to drop, analysts say.

"It's a changing environment," said Ross Roberts, a Ford Motor Co. vice president. "In America today, the average family has so many different things to spend money on - home computers, which weren't a factor five years ago, vacations, college expenses. We just can't count on their spending a little more every few years on a new car."

Buyers have long grumbled about the cost of new cars and trucks, and automakers periodically have held some prices flat from one model year to the next. In 1991, for example, prices increased an average of only 0.9 percent after miserable sales during the Persian Gulf War.

But current changes in the marketplace are different and "hugely significant," said Jeremy Anwyl, president of Marketec Systems, a California research concern.