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To survive or to perish? The helplessness of parts prices

2022-11-08

 In the context of high global inflation, price hikes have become commonplace in the auto industry. In addition to the price increase of chips and battery materials that started last year, the outbreak of the Russian-Ukrainian conflict this year and the approaching energy crisis have prompted the prices of basic materials such as steel, aluminum alloy, and rubber required for the production of automobiles and parts to rise across the board. Coupled with soaring energy costs and logistics costs, the heavy cost pressure has left many parts suppliers feeling overwhelmed.
 
At the annual press and results conference in May, Bosch Chief Financial Officer Marcus Forschner admitted: "Our burden is becoming heavier due to the sharp rise in energy, raw material and logistics costs. Like OEMs pass on the pressure of rising costs by raising prices, and our suppliers must do the same.”
 
According to data from Auto Forecast Solutions, an auto industry data forecasting company, as of October 23, the global auto market has accumulated a cumulative reduction of about 3.62 million vehicles this year. Since the beginning of this year, Japanese car companies such as Toyota and Honda have released new production reduction plans almost every month. Toyota said recently that it will suspend some production of 11 production lines at 8 Japanese plants in November, a move that will affect the output of Corolla, Lexus LS and other models. Toyota blamed parts shortages and said it was evaluating the impact of supply chain issues on future production.