(G) price increases on the way????????

I am in the sales industry selling Agricultural machines. Most are made abroad like germany, italy & the usa. One thing that has happended in the last 6 months is that we have been having major price increases (in the region of 12 to 20%).

Now the reasons stated are the increased price of steel, oil which affects tyre & oil base plastic mouldings, energy & transport costs. And finally sterling has suffered ongoing devaluation since last summer against the Euro resulting in a further increase in imported costs of 15%.

How much longer before all of the above factors hit the car industry & hit the pricing structures of Fiat & the 500.

All of the above factors are relevent to the automotive industry......how much longer before we see a 1.2 pop starting at around £8,500

Yoshi

Everything related to the world's economy depends on the price of oil. This is now at $120 and rising. Yes, there will be ups and downs, but there can only be one ultimate direction for a finite, essential, and ever more costly to extract resource. The whole world is now greedy for oil and supplies are depleting faster than new provinces are coming on stream. Even if a new field the size of Al Ghawar in Saudi Arabia (the world's largest) was discovered, such is the world demand that it would make very little difference.

Since our food comes from oil, our medicines come from oil, our industries are largely fed by oil, and gas, and we use cheap oil based energy in the manufacture and movement of practically everything, there can be no doubt that, try as they will, manufacturers will have to increase the price of their products. The situation we are entering now is structural, not cyclical as it once was.

I keep telling friends to only consider buying the most, and I mean most, economical cars because if it is now £40 to fill up in a couple of years it might easily be twice that. Also, don't live anywhere where you must drive any distance to shop or get to work, or you will be trapped in an escalating cost spiral. House prices in areas distant form workplaces and food supplies will fall in value, and houses that are energy efficient and centrally located will be at a premium. If you are in the market for a car only consider the most economical ones as these alone will maintain any value. Manufacturers are soon to introduce a host of small engined vehicles, and this will help, for a time.

And so yes, small Fiats will cost more - they'll be more expensive to make and more desirable!

Oil industry experts publicly say don't worry, as do governments, but I know a few oilmen, both here and in the middle east, and privately they say - worry.

so basically the film mad max will come true but without the big hair

Whatever happens, the days of us all living like Roman emperors, with limitless hot water, cooled drinks, delicate food available on a whim, slaves to do our work (mechanical slaves now), and the modern bonuses of good medical treatment and easy, quick and comfortable travel thrown in - are numbered.

Mad Max may not be too far off, certainly the powerful will be less and less scrupulous about making sure they themselves remain comfortable, at the expense of the rest, and they will increasingly segregate themselves from the poor and pay mercenaries for their protection. In fact, think pretty much all of human history before the dawn of the modern age - plus a serious hunger induced die-off, and I reckon you're getting there...

I my opinion price increases in the short term are somewhat unlikely, due to the state of the economy.

As food and petrol prices increase, costs to borrow increase etc. people will have less money to spend in the retail market, hence sales will suffer. Your not likely to get the punters flocking through the door with increased prices,

also in Jan it was widely reported FIAT registered there largest ever profit 3.2Bn €, also improving returns from 1.2% to 3% - hardly on the break even point to have to pass cost increases on to customers...

I personally believe your far more likely to get discounts, finance offers, cash back etc due to the slowing economy

Dispite the introduction of the 500, Fiat sales YTD are 0.36% up, % of the market static.

Fiat have no say in the following:

increased price of steel, oil which affects tyre & oil base plastic mouldings, energy & transport costs. And finally sterling has suffered ongoing devaluation since last summer against the Euro resulting in a further increase in imported costs of 15%.

Slowing market or no they won't lose money & if the cars are bought in the UK with sterling then with the 15% shift in the euro PLUS all the other factors, then we'll have to wait n see .

Yoshi

The Bankers eventually increase the supply of money that goes out to country, cost of living drops. "recovery time" after sweating for a bit.

The Bankers then decide to pull in X% of money from the 'economy'. cost of living rises > Massive profits made> Citzens continue to be raped and given bull**** reasons as to why it happens...

Or so I read.

Very true.

Unfortunately, manufacturers cannot afford to make no money on products for ever, or they go bust.

Fiat is in a strong position as their cars tend towards economy. Just as Costco and Wallmart are booming in the US right now, as are Primark and Lidl here in the UK by the way, as consumers storm towards discounters; so value for money manufactures of all types will draw in people who in comfortable times might never have looked twice at stuff without a label. I include Fiat here. Fiat is boxing clever by marketing the 500 slightly upmarket to draw in a customer base sensitive more to fashion than to content, and it seems to be working. This is enabling the company to price the product higher than it otherwise would. Well done Fiat. The company will also soon bring new, more economical, powertrains to market: double well done Fiat.

Whatever happens cars will gradually become less affordable for many people. Cheap, both to buy and to run, cars will be at a premium and will tend to hold their value. Very soon sellers won't be able to give away large, thirsty mass-market cars.

Fiat should survive in the medium term, but manufacturing costs will definitely rise, as Yoshi says, so don't expect the product to get any cheaper. I'd also expect to see T-shirts and other stuff from Primark etc. rise in price as cotton becomes more expensive.

So, 'invest' in cheap quality now, and batten down the hatches for a rough ride. And carry a gun

I think this is already true. I've looked to replace my Subaru Outback as it is very thirsty with something less so, but the price gap was so large that we kept the Subaru (parked 6 out of 7 days though, guess what gets driven the rest of time )

Us too Melannab,
Nice large Alfa Sportwagon has made way for 1.2 500.

Scary to think what the fuel bill and tax on the Alfa (as a daily driver) will be in a years time.
Think small stylish cars such as the 500 have pre empted future trends and will, hopefully, educate the masses that such vehicles are the way to go and can still be fun.