DETROIT -- U.S. automakers are confronting big increases in steel prices that will add more than $100 in costs per vehicle.
The Chrysler group has agreed to pay about 20 percent more on some of the steel contracts it negotiated this summer, industry sources say.
The automaker declined to discuss specific price jumps but acknowledged that steel costs are rising. "We are more or less realistic and recognize what has been going on with the steel market," says Chrysler group spokesman Ed Saenz.
American steel mills are demanding and getting price increases of 15 percent to 20 percent, says Charles Bradford, a steel analyst and the principal of Bradford Research of New York. This would represent the biggest increase in steel prices in decades.
A steel executive, who asked not to be named, confirmed those projections.
Although automakers use other materials, such as aluminum and plastic, a typical vehicle still contains at least $600 worth of steel. Thus, a 20 percent price increase would raise steel costs by $120 per vehicle - a substantial burden.