Not only are vehicle sales poised to plunge way below 15 million units, price increases are a question of when, not if, as his company and rivals get pinched by soaring steel prices.
“If you take May and June and try to say that’s how it’s going to be looking like the next months, this year is going to be way below 15 million,” Ghosn said June 25 after Nissan Motor Co.’s annual shareholder meeting. “We have to be prepared for the worst.”
Nissan is boosting capacity for passenger cars in the United States, as drivers drop pickups and SUVs in favor or more fuel-efficient offerings.
The challenge is making the shift fast enough, Ghosn said.
The entire industry is facing headwinds from climbing steel prices. Ghosn said that will translate into higher sticker prices. Makers of small cars are disproportionately affected by higher steel costs because metal accounts for a higher percentage of the overall costs, he added.
“The bigger the car is, the percentage of the cost of steel in the cost of the car is lower, so it affects more the small-car maker,” Ghosn said. To even out the cost increases from 2007 to 2008, “you’re going to have to increase between 2 and 3 percent the price of the cars.”
“At the end of the day, we are sure that everybody is going to do it,” Ghosn said, adding that steel companies are already asking for new contracts. “Nobody can escape readjusting prices,” he added.
For the first five months of the year, Nissan’s sales were up 0.7 percent to 446,474 vehicles in the United States, against an overall market that was 8.4 percent lower.
You can reach Hans Greimel at email@example.com