The near future will have customers paying more for new cars due to increasing prices of steel, said CEO of Nissan, Carlos Ghosn, at a shareholder meeting in Japan on Wednesday. Ghosn, who also heads Renault, Nissan’s partner, points out the practice will be industry-wide, as raw materials affect all manufacturers.

With Nissan and other manufacturers already announcing higher prices of entry for their 2009 models, the rest of the industry is expected to soon follow. According to Ghosn, car companies will need to increase MSRPs by 2 to 3 percent to offset the added costs.

“All car manufacturers will increase prices. It’s a question of time,” Ghosn said in an Automotive News report. “How can you not increase prices if the price of raw materials goes up 100 percent?”

Earlier this week, China’s biggest steelmaker, Baosteel, said it would nearly double the price it pays mining group Rio Tinto for high-grade iron ore. Like the higher gas prices, demand has risen for iron ore used for making steel, and prices with it due to growing vehicle markets in China and India.

Japanese manufacturers will rely on these, along with Russia, which is Nissan’s “hottest market,” and others, to make up for sales and profits they are missing out on at home and in North America. “We intend to take full advantage of growth in emerging markets,” Ghosn said.

The high gas prices and, on a smaller scale, the growing concern for the environment are seen as the driving forces behind manufacturers to develop zero-emissions electric vehicles. “Very quickly the market is going to shift to zero emissions.” Ghosn commented. “Our priority is to bring an electric car as fast as possible to the market.”

Together with partner NEC, Nissan will invest $115 million in a lithium-ion battery mass production facility, and hopes to bring an electric car to market by 2010.

    Print This Post