The pre-owned car market will grow 2.5 to 3 times the new car market in a few years

Auto companies have been raising vehicle prices, citing rising input costs. Why auto companies say that input costs have gone up when prices of most commodities seem to be coming down?

OEMs have been absorbing increasing input costs in the past years which have been eating into their profit margins. The consumption of steel, aluminium, rubber, glass and plastic is high in the automotive industry. Raw material costs are less volatile as they are acquired under long-term agreements. Over a period of years, the number of components in the vehicles has also increased, which has resulted in higher consumption of raw materials. Strict government norms on safety, emissions and constantly changing technology have a significant impact on the supply chain cost. Stagnant sales, halt of excise sops and increasing inputs cost has made OEMs transfer a percentage of this cost to the end-consumer.

Now the excise sops have gone. How will it affect car sales?

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