A report by the newspaper "Le Figaro" reviewed a number of reasons and factors that prompted manufacturers to raise vehicle prices, and the report said that this came with the aim of absorbing the increases that included the cost of manufacturing materials and components in recent months.

The writer Valerie Collette said that the prices of many commodities and basic metals witnessed sharp increases, such as steel, plastic, copper, nickel, cobalt and lithium, especially platinum and palladium minerals extracted in Russia and used in the manufacture of catalysts, as well as neon, a gas used in the manufacture of semiconductors and half of the world’s production of it is made in Ukraine ;

This comes at a time when Russia has launched a war on Ukraine.

The report stated that while at the beginning of the year manufacturers hoped to gradually solve the supply problems of electronic chips and to return production volumes to the pre-pandemic level, other materials such as electronic packages, electric wires connected to the motor, screens and electric windows are also manufactured in Ukraine, which is living on the impact of the Russian war.

The writer explained that the spread of the “Covid-19” virus - which was believed to have been contained - prompted the authorities to restructure and close factories, thus affecting the manufacturers of components and the sites of manufacturers, such as “Tesla” and “Volkswagen”, which settled there to benefit from greater Car market in the world.

In light of this, the French newspaper report said that the car industry is again plunging into the throes of supplying electronic components, pointing to the closure of the Renault factory in the French city of Douai, which manufactures the new electric car Megan until 25 April.

The report pointed out that the rise in energy prices, in turn, led to an increase in production costs, at a time when suppliers of alloy and iron parts found themselves in trouble.

The writer indicated that it is not surprising that manufacturers have raised their prices over the past months.

The rise in energy prices led to an increase in production costs and the impact on the car market (Reuters)

Expectations of continued price hikes

The Emile Fry France Group, the leading distributor of cars in France, noted that the average price of new vehicles from 27 brands has increased by 15%, with 13% for used cars, in less than 3 years.

“Every 3 months we see price increases of up to a few hundred euros, and manufacturers pass the cost increases of raw materials to car prices,” the writer quoted Stephane Caldero, managing director of the Emile Frei France Group, as saying.

The writer pointed out that within two years the price of some types of cars increased by 12.4%, stressing that this trend will continue, as instead of sacrificing profit margins, manufacturers will pass the cost increases to their customers.

The writer also quotes Michael Le Moelich, associate director at Boston Consulting Group, as saying that “vehicle prices have already gone up a lot in 2021, and manufacturers had to choose which vehicles they would actually be able to manufacture due to the lack of electronic components in large enough numbers. Today they are facing an equation What is new is that they are unable to increase their production while facing cost inflation of more than 10% this year.”

The writer pointed out that customers accepted price increases if the cars included innovations and more independence, indicating that they now have to pay more for the available products even if they do not have all the options available naturally.