Russian metal producers plan to increase the prices supplies to automakers by 10%–30% from 1 July, Kommersant business daily reported, citing representatives of automakers AvtoVAZ and Kamaz.
This is going to eliminate the entire government support provided during the economic crisis, the Kamaz representative said. Increased prices for metal products were likely to lead to higher car prices, the AvtVAZ representative told the daily. The automaker increased some vehicle prices at the weekend, citing rising parts and supply costs.
The largest suppliers of metal products to automakers are Magnitogorsk Iron and Steel Works (MMK), Severstal and Novolipetsk Steel (NLMK). MMK and Severstal conclude long-term contracts with automakers with a pricing formula tied to global prices. According to sources cited by the daily, the price of metal supplies to automakers is lower than the market price. However, the AvtoVAZ spokesperson said even that price was unacceptable because of increased global prices for metals, the daily said. MMK and Severstal didn’t comment on the issue.
Representatives of AvtoVAZ, GAZ Group, Kamaz, and Sollers held a meeting on 14 May to discuss the planned increase of metals supplies and decided to apply to the industry and trade ministry to resolve the problem, the daily said, citing sources.
Analysts expect all automakers, not only AvtoVAZ, will be now forced to increase vehicle prices because of more expensive metal supplies and will have to seek funds to replenish their working assets.