Car Market Price Competition in the Mid 1970s

Rapid inflation, the severe reduction in demand for cars and the resultant over‐capacity, reestablished the importance of price as a competitive weapon in the car market between late 1973 and 1977. In times of steady economic growth the over‐whelming influence of changes in per capita income on car demand tends to relegate the price variable to a secondary position, and often it is almost totally discounted as a major causative variable. However, in a number of ways the state of the market in the mid 1970s has shown the continuing importance of relative prices: the pricing of imports, exports and price competition by domestic manufacturers all being geared to improving a manufacturer's market penetration. Consequently, the pricing decision remains as one of the most important features of competitive strategy and as a major factor in managerial decision making.