According to a recent research report by consulting firm AlixPartners shows raw material expenses per each North American-built vehicle have dropped around 24 percent from last year.
That means each North American produced vehicle cost $476 less in terms of raw materials – plummeting from around $1,976 last August to $1,500 in May. This means the automakers in North America have another motif of celebrating their fatter profits this year, besides the strong sales demand and lower labor costs – they tend to pay dramatically less for steel, aluminum, natural gas and other commodities. “A lot of this reflects that China isn’t growing as fast as some people expected,” said Mark Wakefield, managing director of Alix Partners’ enterprise improvement practice. “It’s really unusual because it is happening without an economic crisis.” The Chinese economy, the world’s second largest, has been surging at around 7 percent this year, according to government figures, way slower than its usual 10 to 15 percent rate over the past decade or so. Also, industrial quota in India and Brazil, once the fastest surging emerging markets, is now considerably lower than predicted. And in Russia automotive sales have plummeted 38 percent during the first five months of the year, after a massive double-digit drop last year.
And the savings are not seen in the pockets of new vehicle buyers in the US – the moderate gas prices have turned into booming demand for bigger and more expensive rides. And with an excess of easy financing and longer-term loans the automakers seem to be the primary beneficiary.