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Justice Dept. Starts Probe of Auto Pricing

October 11, 1994|From Associated Press

DETROIT — The U.S. Justice Department has begun an antitrust investigation of the way prices are set on cars and trucks, including "value pricing" designed to limit haggling, a trade journal reported Monday.

The department has asked for information from current and past officers of the National Automobile Dealers Assn. and contacted at least one of the Big Three domestic auto makers, Automotive News reported.

The request covers documents on topics that include one-price selling and value pricing, and any correspondence that mentions the price of any motor vehicle, the report said, citing unidentified sources familiar with the investigation.

The inquiries were made under antitrust provisions of federal law and sought evidence that competition has been restrained in the sale of new and used vehicles, Automotive News said.

"It's a very large fishing expedition," James Lust, 1993 president of the dealers association and a Chevrolet-Buick dealer in Aberdeen, S.D., told the journal.

Offices at the Justice Department and the dealers association were closed Monday for Columbus Day and officials could not be reached for comment on the report.

Automotive News said the investigation is separate from a Justice Department inquiry into auto makers' sales to rental fleets, which was reported last week.

Part of the pricing inquiry deals with the growing practice called value pricing, the report said.

The method is auto makers' response to consumers who dislike the negotiating that has traditionally been part of buying a car or truck. A value price implies that there will be little or no dickering because the price is fair for the vehicle and the options it includes.

General Motors Corp. has been the most aggressive of the Big Three in using value prices. Its Saturn subsidiary and Oldsmobile division have adopted the system completely, and GM's California marketing strategy relies on it.

Ford and GM spokesmen said Monday that the companies had received no Justice Department inquiry on pricing practices. A Chrysler Corp. spokeswoman told Automotive News that the department had asked for some information.

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