General Motors Co. said Monday it will raise car and truck prices by an average of $123 per vehicle to make up for its increased oil and metal costs.
The company is the third major automaker to raise prices in the past three weeks because of higher costs, signaling that the surge in crude is starting to affect car prices for consumers. Ford Motor Co. and Toyota Motor Corp. both announced price increases in March and early April.
The GM increases, which affect nearly all Buick, Chevrolet, Cadillac and GMC models, will go into effect in the U.S. starting May 2. The higher prices are limited to the United States, spokesman Tom Henderson said.
Other automakers likely will hike prices, too, because all are experiencing the same cost increases, said Martin Zimmerman, a former Ford executive and now a professor at the University of Michigan Ross School of Business.
But Zimmerman questions whether the higher prices will stick.
"My guess is that with still-weak employment in the economy as a whole and still-weak auto demand, price increases are not likely to spiral up and cause a generalized inflation problem in the next few months," he said. He added that automakers could offset the price increases with rebates and low-interest financing.
While car companies are on pace to sell 13 million cars and trucks in the U.S. this year, up from 11.6 million in 2010, they are still far below the 16-million level reached in the middle of the last decade.
GM, Toyota and Ford all said higher oil and steel prices played a big role in their increases. Oil prices have climbed steadily since November, touching more than $113 this month, the highest since the recession. The surge is due to uprisings in Libya and the Middle East.
Oil prices affect the cost of plastic parts and tires, as well as filling cars with gas before they are sold.
Shares of GM fell 27 cents, or 0.93 percent, to $29.97 on Monday. The stock hit $29.91 in early trading Monday, its lowest price since the company returned to the public market on Nov. 18 following bankruptcy protection.