Carlos Tavares, CEO of Stellantis, has made some important statements in which he expresses his concern about the increase in the cost of new cars. The head of the fourth largest vehicle manufacturer in the world warns that there is a risk that the middle class will not be able to buy new cars.
The automobile sector is dealing with a whole series of problems that affect the proper functioning of commercial and industrial activity. The stock crisis at dealerships due to the global shortage of microchips is one such problem. However, and for the consumer, there is a determining issue that has been on the table for a considerable time and that is gaining prominence month after month. The rise in prices of new cars.
Stellantis, the fourth largest vehicle manufacturer in the world, is no stranger to this issue. What’s more, the top leader of this company, Carlos Tavares, has shown his concern about the rising cost of new cars. A problem whose solution is not in sight in the short term. The CEO of Stellantis recently highlighted that the prices of new vehicles are reaching record levels.
Shortages and inflation threaten new car sales
Tavares pointed out that, with new car prices at record levels and inflation threatening to further reduce buyers’ purchasing power, there is evidence that many potential buyers are being “pushed out” of the market. Speaking to a US media outlet, the leader of Stellantis also assured that the pressures behind the increase in costs are not diminishing..
“I am very concerned about the affordability effect. It is becoming a much bigger problem as inflationary pressures increase,” Tavares said. The arguments provided by the CEO of Stellantis point to several factors, starting with the aforementioned shortage of microchips. This has led to lengthy production cuts across the industry which, in turn, has led to a lack of available units at dealerships.
There are other factors at play as well, including how fast rising raw material costsstarting with steel. In fact, commodity prices have generally risen rapidly in recent years. A problem that has accelerated with the war problem that exists in Europe. And more specifically in Ukraine. The price of a ton of aluminum went from a low of $2,554 (€2,335) in November to around $3,500 (€3,200) this week. The same has happened with nickel and palladium, whose prices have practically doubled.
The risk that the middle class cannot buy a new car
Just a few days ago, Tavares was in charge of presenting the Dare Forward 2030 roadmap to society. A vision of the future based on the strategic plan that Stellantis has launched to become the world leader in electric vehicles. And although very ambitious electric car sales targets were announced, Tavares stressed that, at least in the short and medium term, electric cars will cost more than comparable gasoline models. Vehicle manufacturers like Stellantis will need to find ways to cut costs quickly. The reason? New price increases cannot be passed on to consumers. They even warn of the possibility of finding themselves in the position that the middle class cannot buy a new car. A catastrophic scenario: “The middle classes could not buy new cars.”
The top leader of Stellantis once again pointed out the risk of a possible escalation in the cost of raw materials due to the war that is taking place in European territory. It is something that, in the words of Tavares, “cannot be ruled out.” These are turbulent times for the automotive sector. And all this in the midst of the transition process towards the era of fully electric mobility.
Source: Detroit Bureau