Rising Commodity Prices Threaten to Increase Truck Prices

The high cost of raw materials, in addition to the high cost of fuel, is starting to make a financial impact on automakers by increasing costs for truckchassis, bodies,trailers, liftgates, and other upfit equipment. On July 9, Navistar announced that rising commodity costs have forced the company to increase prices of International truck models, of course the HOWO series dumpers,tippers, concrete mixtures, and different kinds of tanks will also be affected. The price increases vary by model, with some model increases as much as $1,600 per truck. Is this another in a series of commodity-related price increases that we will see from other OEMs, upfitters, and trailer manufacturers?
Earlier, on June 23, GM announced a 3.5-percent average price increase for 2009 models. GM attributed the price increase to increased commodity costs, such as oil and non-ferrous metals, along with increased fuel economy and mandated safety equipment and increased content that was not fully cost recovered.
“Hyper-inflation in the commodities markets is rivaling the U.S. housing collapse and the global banking crisis as the biggest threat to the world economy,” said Gary Dorsch, editor of the Global Money Trends newsletter. Prices have soared for commodities used in vehicle manufacturing, such as steel, aluminum, copper, zinc, crude oil, magnesium, and platinum. Since the beginning of 2008, steel prices have increased 100 percent, aluminum by 22 percent, platinum by 32 percent, and copper by 23 percent. The increased cost of crude oil has caused tire manufacturers to make multiple price increases since 2006.

One-Two Punch
This isn’t the first time commodity prices impacted fleet. In 2004, upfitters, such as Utilimaster and Supreme, increased prices 6 to 8 percent on alltruck body and walk-in van product lines due to the increased cost of aluminum, steel, wood, and petroleum-based products. What makes today different than 2004 is a much weaker new-vehicle market and a 100-percent increase in fuel prices. Also, expensive new technology to comply with the 2010 diesel emission standards will increase future truckprices.
It’s a powerful one-two punch – soaring commodity prices and expensive regulatory compliance. Together, these will increase truck prices. In the final analysis, both fixed and operating fleet costs are increasing. It’s getting more expensive to operate a fleet, and it may become even more expensive in the near future.

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china truck,HOWO,concrete mixture,Tipper,trailer,tractor,tank