GM to raise prices on 2009 models, despite slow market

General Motors Corp. told dealers Monday it plans to raise prices on 2009 models by an average of 3.5 percent despite a tough market that is forcing the automaker to cut production and discount its 2008 models.

Company officials said in conference calls to dealers that the increases will allow GM to recover only part of the rising cost of steel and other commodities and the cost of safety and other features on the new models. The increases will amount to about $1,000 per vehicle.

GM already had increased the prices of its 2008 model year vehicles twice because of rising commodity costs, spokesman John McDonald said. The move comes a little more than a week after Chrysler LLC announced a 2 percent increase in the price of its remaining 2008 vehicles.

GM also said Monday it will run a sale June 24-30 to help clear out high inventories of 2008 pickups, sport utility vehicles and larger cars. The sale includes zero percent financing for up to 72 months.

U.S. auto sales were down 8 percent through May due to the weak economy, low consumer confidence and high gas prices, but sales of trucks and SUVs have fallen even more sharply. Sales of the Chevrolet Silverado large pickup were down 26 percent through May, while sales of the Chevrolet Tahoe large SUV fell 30 percent.

Large cars also haven't been immune to a sales slide. Sales of GM's Buick Lucerne sedan, which is among the cars that are part of the incentive program, were down 26 percent through May.

In response, GM said Monday it will further cut production of trucks and SUVs. The company will cut shifts, reduce assembly line speeds and temporarily idle seven factories.