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Chinese automakers have no plans to raise car prices despite soaring steel prices
Shanghai. February 27 (Gasgoo.com) – Some Chinese automakers said they have no plan to raise car prices despite soaring steel prices.
"The raise of raw material costs is testing our profit-making capability," said Fu Shoujie, deputy general manager of Guangzhou Honda. "We will try our best to minimize the impact of steel prices on our car prices by improving our cost management."
Takehiko Kikuchi, managing director of Dongfeng Nissan Passenger Vehicle Company said his company would not pass the soaring material costs on to car consumers.
"The situation we have today is that raw material costs are going up while car prices are falling. This will make competition between car makers even harder," Kikuchi said. "Our key to survive the difficult situation is to try our best to absorb the impact of the climbing costs."
Earlier last week, Asia's three largest steelmakers - Nippon Steel Corp., JFE Holdings Inc and Posco have agreed to a 65 percent increase in iron ore contract prices with Brazilian ores suppler Companhia Vale do Rio Doce starting April 1. The price settlement was 35 percent higher than some Chinese analysts estimated.
China's largest steel maker, Baosteel, agreed on last Friday to pay 65 percent more for iron ore to Brazil's Cia Vale do Rio Doce, for 12 months beginning April 1, 2008, according to Xinhua News Agency.
As China's largest auto plate maker, Baosteel supplies auto plate products to over 30 Chinese automakers and the company owns 50 percent of the country's auto plate market.
Baosteel is expected to raise its steel product prices for the second quarter at the end of this month to cover the rising costs of the raw material. Soaring coal and shipping costs have combined to push up the raw material cost and squeeze steel makers' profit margins.
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