Home Markets Jeep maker Stellantis expects raw material inflation to moderate next year

Jeep maker Stellantis expects raw material inflation to moderate next year

by SuperiorInvest

Engines undergo final inspection at the Stellantis Dundee Engine Complex on August 18, 2022 in Dundee, Michigan.

Bill Pugliano | Getty Images

Automobile company Stellantis expects inflationary costs of raw materials to decline next year after rising significantly during the coronavirus pandemic, Chief Financial Officer Richard Palmer told investors on Thursday.

Cost increases in critical raw materials used by automakers such as steel, aluminum and others for EV batteries have been largely offset record prices for new vehiclesit dampens carmakers’ margins. But as prices rise slowly, costs have yet to follow.

Palmer said he expected favorable new vehicle pricing to continue next year, but said inflation could continue to hit other parts of the automaker’s supply chain.

“What we’re going to see in 2023 is a lower impact of commodity inflation than what we’ve seen this year. So I think the entity impact of inflation will be lower in 2023,” he said while discussing third-quarter sales and supplies. “Inflation may be high on other elements of the cost curve, but they are lower this year relative to raw materials.”

Palmer did not specify how inflationary costs he expects to decrease or increase in 2023. Spokesperson of the company Stellantis, which was created by the merger of Fiat Chrysler and the French Groupe PSA in January 2021Palmer was referring to the lower inflationary costs of steel and aluminum. She refused to reveal what elements could be higher next year.

Costs across the automotive supply chain have skyrocketed during the coronavirus pandemic as companies struggle with logistics, materials and staff.

Ford warned investors in September that the company expected them to arise additional costs of $1 billion during the third quarter due to inflation and supply chain issues. The problems led to a parts shortage affecting roughly 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs, that did not reach dealers.

In June AlixPartners reported the costs of raw materials and materials for both electric cars and traditional models with internal combustion engines, it more than doubled during the coronavirus pandemic.

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