The skyrocketing cost of commodities like steel and aluminum have pushed several automakers to raise the price of 2009 models. Hyundai is bumping the price of its 2009 models an average of two-percent to help cushion the blow in Korea and in the States. The price of steel has risen 60 percent in a little over a year, and other commodities are up over 20 percent as well. That's bad news for all automakers, and Hyundai expects the trend to continue. Hyundai's Kia brand stlil hasn't announce price hikes, but we're guessing the economical car maker will follow in big brother's foot steps.
To further complicate matters for the Korean automaker, its unionized workforce is unsatisfied with wages. The rank and file have scheduled four-hour work stoppages for Wednesday and Friday. Unless the government intervenes in the matter, the union will likely get some kind of wage increase, giving Hyundai and Kia yet another justification for raising prices.
The Tata Nano exudes frugality, and when you're trying to build a capable vehicle for a paltry $2,500, that's not exactly unexpected. Unfortunately for the Indian automaker, the quickly rising cost of steel may thwart plans to hit the magic price-point. The price of steel has risen by 50 percent in less than a year, and even though the little Nano is only 1,300 lbs, when you're making an econobox on the mega-cheap, every penny counts. Like US automakers have done in the past, Tata is looking to its suppliers to shoulder some of the financial burden. Amazingly, the suppliers are okay with that, provided that Tata does its share.
Even with concessions from suppliers, it's still up in the air as to whether Tata will achieve its lofty target. It appears using a nice round price as a selling point for a vehicle that's a year away wasn't such a good idea after all.
A few years ago, high(ish) gas prices and fierce competition had Detroit automakers talking about the "perfect storm" that the domestic industry was facing. Fast forward to 2008 and the entire auto industry, not just U.S. automakers, is in a full-blown tsunami. Gas is $4 per gallon, the U.S. is muddling its way through some seriously wobbly financial times, and now the price of steel has nearly doubled in five months to $1,035 per ton. Since just this January, the cost of steel in your automobile has risen $500 per car. The reasons for the sharp incline in prices includes both the increased cost of energy for steel makers and higher demand for the strong stuff coming from rapid growth in countries like China and India.
With everybody feeling the pinch of high materials, which also includes sharp increases in platinum and aluminum, suppliers are passing these costs on to OEMs, who in turn will be passing them on to us. That means we may soon be paying a lot more for our next vehicle. With rising gas prices, inflation, and a weak U.S. economy, car customers appear to be experiencing their own little thunder storm, too.
