Monday, June 30, 2008

Surely, there's a ceiling somewhere...

As if soaring oil prices were not enough we now have to deal with a dramatic increase in the price of the raw materials required for the manufacture of cars. This rise in raw material, in conjunction with the oil price crisis, has caused care manufacturer stock to drop and has led companies to state that they will have to raise prices in order to remain profitable.

Despite the difficulties they would face, Toyota statements last Friday read that they may have to increase the prices of their passanger cars to cope with the situation. According to the Japanese media, Toyota may raise the price of all domestic vehicles in one go. If so Nissan is sure to follow, as they have made similar statements themselves, but would have to wait for the market leader to increase their prices before they could do the same and remain competitive.

One of the reasons for the surge in raw material prices is the fact that China has agreed to pay 95% more for steel from its Australian suppliers than it did last year. That automatically affects the prices for everyone and it would seem that China's developing economy is doing better than the US, as far as cars are concerned at least.

At least car manufacturers are still trying to make cars lighter and with less parts, which affects both petrol consumption and the amount of raw material involved in the construction of the cars.


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