High gas prices are a bitch. But other factors prevent the "build a small car, stupid" strategy from rescuing the auto industry. Like the fact that steel prices have increased 60 percent this year. In the compact car market, where price point is king and profit margins are razor thin, automakers are being forced to raise prices to maintain what little profits exist. Bloomberg reports that Hyundai will increase prices on its budget cars for the second time since June, due to high steel and other component costs. The good news: Hundai's US sales are down "only" 2.3 percent and actually up 1.3 percent since the last price increase. The bad news: even the second price increase "isn't enough to cover the higher costs, but it's hard for them to boost prices more without crimping sales.'' And it gets worse too. All of Hyundai's Korean production will endure stoppages this week, thanks to labor demands for a nine percent wage increase. With sister company Kia holding on to its rock-bottom pricing, it's no wonder that Hyundai is heading upmarket. But will consumers (particularly in crucial developing markets) follow?
Find Reviews by Make:
There’s a good side to those rising steel costs: the scrap value of unwanted SUVs is going up, too.
I’m really getting tired of hearing about exploding commodity and raw materials prices. First oil, then copper, steel and food prices too. It’s as if everyone has learned from big oil that if you squeeze the market then prices ignite and profits soar.
I’ve never been a conspiracy theorist, but it truly feels like evil forces are getting the upper hand in the global marketplace.
I suspect that rather than conspiracies, it is more like good old fashioned market forces at work, prndlol.
As in, a huge – and I mean HUGE – proportion of two of the previously poorest nations in the world – each with massive populations – are entering the middle class, and just like everyone else, want better foods; better houses; better cars (or cars intead of bicycles or mopeds or scooters or 3 wheel dangermobiles).
T. Boone Pickens recently indicated that with worldwide oil demand exceeding worldwide oil supply, the short, medium and long term prospects for meaningful oil price reductions is obviously about the same chances of a snowball surviving hell (my paraphrasing, not his statement).
But as any good leader, rather than simply saying “this is wrong” and then sitting down, he’s enough of a man to actually make real world suggestions as to “how we get to a worthwhile goal and what roads to use to get there.”
http://www.pickensplan.com/
I dunno – T. Boone’s “conversion” reminds me of a deathbed confession of a serial killer. (/hyperbole)
But he certainly has a plan, whereas the Gov’t has just been spinning in circles.
prndlol said “I’ve never been a conspiracy theorist, but it truly feels like evil forces are getting the upper hand in the global marketplace.”
You are quite correct. Those forces have many millions of members around the globe. It is remarkable that such diverse and dispersed participants achieve such coordination, but one observer said marketplace behavior is guided by a spirit called “The Invisible Hand.”
You are correct 50merc. A fellow by the name of Epperson wrote the book called “the unseen hand.” I have a copy somewhere…excellent if not scary reading.
I wonder if anyone is re-thinking the “inspired-by-Rubbermaid” panels made (in)famous by Saturn?