Impact: Ford to increase prices again! image

Ford Motor Co. has increased prices on its 2011 models by an average of $124, or 0.4%, the third price increase since January as the automaker tries to offset rising prices for steel, plastic and other materials.

Nissen said that Ford increased prices by an average of 1.3 percent, or $375 per vehicle, this year, which adds to the average price increase for all automakers in the United States.

Ford’s latest bump in list prices is likely in reaction to a price hike from General Motors, who also raised pricing by 0.4 percent last month.

Steel and aluminum prices remain at or near three year highs. An average car contains about 325 pounds of aluminum, and because aluminum refining requires so much electricity, the cost of coal also has an impact on the cost of aluminum.

Volkswagen also bumped up the base price of the Jetta by $500 this month, due to the cost of raw materials, but high demand is also to blame. This is sort of a Catch-22 situation, where economic recovery first helps automakers by generating increased sales, then takes it all away with high gas prices and increased costs with raw materials.