Russia's invasion of Ukraine already influenced different parts of the world. However, now the car industry is also suffering from the war. This war caused the auto industry to cut production and sales of cars for the next two years. One reason for this is that several car factories in Eastern Europe had to shut down. Some factories in Ukraine for example have tried to keep producing cars, however, workers had to stop their work in order to flee rocket fire. Another reason for the decrease in production is that the price of precious raw materials has increased tremendously . The S&P Global Mobility already reported that it is going to cut its global car production by 2.6 million in both 2022 and 2023. European car production is expected to fall by 9%. That is a 1 million decrease in production. The S&P Global Ratings forecasts that the global car sales in 2022 will drop by 2%. Some of these lost sales is because Russia and Ukraine will not be buying a lot of cars during the war. However, the greatest reason for the drop in production and sales is the shortage of raw materials. Russia produces one of the most palladium and nickel in the world. Palladium is used to clean vehicle exhaust, and nickel is used for electric vehicle batteries. With the lack of palladium and nickel in the car industry –due to the war–the production and prices of cars will be influenced negatively.
There has been an increase in car prices over the past year. Many people switch from leasing a car to buying it. The reason for that is that people believe that car prices can appreciate with time. My friend bought a Toyota Camry 2012 for $10,000. Now, this car is worth around $12,000.
ReplyDeleteAlong with the microchip shortage affecting the auto industry, this is another big blow. I expect the price of used and new cars to continue to rise to meet the demand for new cars, and used cars respectfully.
ReplyDeleteI also think that the price of new and used cars will continue to increase over the next year. Until our supply chain issues resolve themselves and the war in Ukraine comes to an end, the price of raw materials will continue to increase, and thus, the price of cars will continue to increase as well. I do think though that the price of used cars will begin to decrease though as more new cars begin to enter the market eventually.
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