Tavares Muses About Customers Being Priced Out of Market

tavares muses about customers being priced out of market

No one reading this should be surprised by the news it’s more expensive than ever to find one’s way into a new car. All kinds of external forces have driven average purchase prices through the roof, and strife halfway around the world is currently playing a role in driving up the cost of fuel.

CEOs of the world’s automotive companies have taken note, of course. Late last week, during a virtual roundtable discussion with industry wonks, Stellantis boss Carlos Tavares expressed his opinions on the matter – and spoke of his concerns.

According to The Detroit Bureau, Tavares says he is very concerned “about the effect of affordability” as it relates to the auto industry, going on to opine how the situation may worsen as inflationary pressures escalate around the globe. Production cuts, which began two years ago when factories temporarily shuttered at the beginning of the pandemic but were then acerbated by a lack of semiconductor chips and other supply chain problems, have created severe inventory shortages – an issue whose impact on affordability has been covered multiple times on these digital pages.

An interesting stat tossed out by Tavares was the estimation that there are barely 1 million vehicles sitting in worldwide dealer inventory as this is being written in early March. That’s about one-third of what’s considered normal for this time of year, apparently. We’ve reached out to a few dealer contacts to gauge the accuracy of this estimation in this neck of the woods. To be sure, most lots around these parts are emptier than a politician’s soul.

The explosion of cost for raw materials also doesn’t help. Aluminum has apparently jumped about $1,000 per ton since just before Christmas, and per-ton nickel prices have reportedly increased by approximately 10 grand in the last few months. These essentials are used in bulk for vehicle production – and have no small impact on thwarting the efforts of an OEM to achieve EV price parity with gasoline-powered vehicles. The latter was referenced by Tavares during last week’s roundtable, in which he explained car companies will need to fandangle their way through creative cost containment so these price hikes are not wholly passed on to customers. Doing so, he said, would create a market in which “the middle classes would not be able to buy new cars.”

Yikes.

Suffice it to say those at the helm of car manufacturers don’t expect this tough situation to ease up any time soon. In a separate conversation late last month, Tavares also said he expects Stellantis suppliers to eat some of these costs in an effort to prevent runaway prices on EVs, saying the current climate should provide “ a very nice Darwinian transition period” for suppliers and OEMs.

[Image: Stellantis]

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  • Schmitt trigger Schmitt trigger on Mar 08, 2022

    Sorry for my ignorance but what is ADM? Googling the term one finds anything from “Archer Daniels Midland” to the gamut of “average daily membership” to “adaptive delta modulation”.

  • BobinPgh BobinPgh on Mar 12, 2022

    Now might be the time to come up with Imperial as a stand-alone brand, maybe with a label in the engine compartment that it is "by Stellantis" No more "Chrysler Imperial" could give the brand more cachet.

  • Snickel Fritz I just bought a '97 JX 4WD 4AT, and though it's not quite roadworthy yet I am already in awe of it's simplicity and apparent ruggedness. What I am equally in awe of, is the scarcity of not only parts but correct information regarding anything on this platform. I'm going to do my best to get this little donkey back on it's feet, but I wouldn't suggest this as a project vehicle for anyone who doesn't already have several... and a big impressive shop with a full suite of fabrication/machining/welding equipment, and friends with complimentary skillsets, and extra money, and... you get the idea. If you don't, I urge you to read up on the options for replacing anything on these rigs. I didn't read enough before buying, and I have zero of the above suggested prerequisites... so I'm an idiot, don't listen to me. Go buy all of 'em!
  • Bryan Raab Davis I actually did use the P of D trope, but it was only gentle chiding, for I love old British cars of every sort.
  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.
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