Why have cars gone up so much in price?
Vehicle inventory has been dramatically reduced around the world due to a lack of semiconductors, which amid demand for laptop, consoles and smartphones, began to be scarce for vehicle manufacturers. The international consultancy IHS Markit points out that in 2021 9,580,911 vehicles ceased to be produced in the world.
“The price is driven, among other things, by scarcity. It is a matter of supply and demand,” says Lucien Pinto, director of Sales and Marketing for Ford in Mexico.
The assemblers have also faced the increase in commodity prices Already higher logistics costs. “A container that used to cost you $8,000 today costs $29,000,” says Pinto.
Steel, a key casing material, hit a high of $1,945 on Aug. 31, while nickel hit as high as $21,425 on Oct. 21. To this scenario is added the increase in maritime transportation freight, which reached increases in the costs of interoceanic crossings of up to triple digits.
Aluminum, necessary for the manufacture of engine heads and transmissions, reached an annual maximum of 3,229 dollars per metric ton on October 18 of last year, not seen since July 2008, according to a report by Banco Base.
Finally, more and more assemblers are abandoning the entry segments, Like the city cars and the hatchback, to concentrate their efforts on larger and more profitable models. SUVs have gained ground in global markets and Mexico is no exception. About a third of new vehicle sales are of this type, according to AMDA data.
General Motors, for example, announced the end of the marketing of its citycar, Beat and Spark, in 2021. Months later, Ford also stopped selling its Figo subcompact sedan. Both brands have left these segments behind to concentrate on their electrification plans.
“It was not easy to give up a Compartir (market share) that you had for a vehicle that you sold cheaply, but lost,” says Pinto. “But other brands are already following Ford’s strategy. They say: ‘I’m not good at competing in these segments, so I’d better leave and dedicate myself to more profitable ones,’ says Pinto.
This year, Volkswagen also announced that it would stop marketing its Vento subcompact sedan to focus on beefing up its SUV lineup. Years before, it also discontinued its Gol model.