First was the dollar. When the US currency went from 13 to 17 pesos, then to 21, with a peak close to 25, the brands raised the prices of cars because they are produced with inputs priced in the US currency. But now that the dollar is stabilized at around 20 pesos – a stability that can be broken at any time, but there it is – since the last year of Enrique Peña Nieto’s government, this reason (or pretext for some) is no longer valid. . Even more difficult to understand for many is the fact that, despite a contraction of more than 28% in the Mexican market in 2020, prices have continued to rise, as if the law of supply and demand did not apply to the market. Mexican.
The worst thing is that, indeed, it does not apply. Or it applies very little. And there are other factors that keep pushing car prices higher. Yes, that’s right, the surge of raises is not over yet.
Why? If fewer people buy a certain product, this is going to push prices down. This is a historical economic truth, but in the case of cars in Mexico, there are other data. The first of these is that car prices in dollars in our country are among the lowest in the world. Our purchasing power at this moment only loses to Cuba and Venezuela and, if prices are not that low, nothing is sold and it is not in the interest of local manufacturers not to sell anything because they need to maintain the network of distributors and help with their part. to a better social group, beneficial to themselves. But selling a little does not affect them so much because in a country where production is designed for export, selling a car for the US market, the most important for Mexico, suits them better because they sell it more expensively. And they receive in dollars. Want more hidden data?
The weight of metals
The main component in the manufacture of automobiles, steel, has seen its price go through the roof in the most recent months and the fault in this case is indeed supply and demand. With plants closed in part of the first half of 2020, due to the coronavirus, and a faster-than-expected recovery in the global economy, demand for the metal whose largest global manufacturer is China has grown strongly and pushed prices per ton. of steel to break the previous record of $ 1,070, in 2008, to reach $ 1,080 per tonne. Five months ago the average price was $ 440.
Another very important metal for producing cars, aluminum, has also risen sharply in prices, from $ 1,700 last March to $ 2,086 now.
Many do not know it, but to produce a car today you need to use some very rare and expensive metals, such as platinum and palladium, necessary for the manufacture of catalysts. Gold and silver are also used in the electronic circuits of the car and its computers, which there are more and more, be it to monitor the operation of the engine or power the beloved screens and its navigation systems, for example. Also, airbags and sound systems use gold. Silver, also used in electronic circuits, will probably have a greater share in the future of cars when the need for energy storage and a smaller size with less weight, force the industry to replace lead acid batteries with some of silver oxide.
Last but not least, the shortage of semiconductors in the market has raised the cost of companies in the sector. Some have been forced to stop production because of it, as Volkswagen did with the Jetta in Puebla.
Yes, there is less demand and a higher price for cars, because there is “other data” that most of the population does not know about the manufacturing process of the cars that we drive every day. Whoever is thinking of buying a car, better do it now, before prices rise because those, for several months, should continue to rise and then, hopefully, stabilize, but they will hardly go down again.