DETROIT -- A shrinking sales market and renewed efforts by import automakers to remain competitive at any cost in the world's most lucrative car market will make 1988 a good year for buyers, industry analysts said Thursday.
Import carmakers, both Japanese and European, will continue to be squeezed by the falling dollar -- which has forced them to raise prices of U.S. models significantly -- and the need to retain market shares, they said.
'The big price increases by imports from the weakness in the dollar will make life a little easier for some domestic automakers as far as pricing is concerned,' said analyst David Healy, of New York investment firm Drexel Burnham Lambert Inc.
As a result, however, some analysts believe buyer incentives among the Big Three carmakers -- General Motors Corp., Ford Motor Co. and Chrysler Corp. -- may not be much different from this year's sporadic offerings, although they will continue throughout the new year.
'They will remain about constant,' Healy said. 'Carmakers do have high inventories in some car lines, but incentives will just remain part of the landscape.'
'They may even be less agressive than they were this year or last because car companies have taken fairly strong moves to cut output to avoid production gluts like in previous years,' said Joseph Phillippi, of Shearson Lehman Brothers Inc.-E.F. Hutton & Co. in New York. 'It took awhile, but it looked like they have learned their lesson.'
But Mary Ann Keller, vice president of New York investment firm Furman Selz & Co., said buyer incentives will heat up in 1988. 'There will be more extensive and expensive buyer incentives next year.'
Import carmakers, many of which once sold cars at higher than sticker prices, may resort to more customer incentives to protect their share of a market, which will see more U.S.-built Japanese cars through 'transplant' operations. So far, most companies have been relying on dealer incentives to stimulate sales.
'Japanese cars are holding well to their share of this market, and they will not give it up willingly,' Phillippi said. 'I'd love to be wrong about it, but competition will heat up.
'This is the largest free, upscale market in the world,' he added. 'It's like what Willie Sutton once said when asked why he robbed a bank -- 'because that's where the money is.'
'The imports will give up profitability to keep their shares,' he said. 'They think that if they miss a sale, and a guy goes out and buys a GM, Ford or a Chrysler, then they've lost him for three to five years.
'One has to recognize that Japanese carmakers will go back to work, as they have done several times before in the past, and get even more agressive,' Phillippi said.
Phillippi also said some smaller Japanese carmakers, like Subaru, could suffer in the new year.
Analysts agree that overall car sales will shrink in 1988 from just over 10 million units for 1987. Estimates range from declines of 5 percent to 10 percent.