Cars are increasingly expensive in Mexico, but it's not 100% the fault of brands: these factors are behind

Industry today is spoken of 10 comments Mau Juárez

Buying a new car in Mexico seems more and more a dream.Month by month we see how prices adjust and rise to the point where there are no new cars for less than 150,000 pesos.The fact that prices climb so quickly is not a decision of the brands to earn money overnight.There are factors that influence a lot and here we will tell you what they are.

To bring clarity to the subject, we talked with Gerardo San Roman, Head of Latin America in Jato Dynamics.From his experience he tells us how the market develops and what decisions are those that mold what reaches the flats of the dealers and the changes in prices.

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We have all come to think about how X or Y a car has a price that even looks like a mockery for the consumer, but when we review the prices of similar ones, we notice that the difference is not so much and that in general all cars are getting more expensive, and toSometimes they do it at a rate for which we are not prepared.

Exactamente el mismo hatchback que costaba $216,900 hace 3 años, hoy cuesta $266,600. Y ejemplos como este, sobran.

Car brands are handled like any other business.They must have profits to continue growing and keeping their facilities and workers in operation, because the pure taste of making cars does not live.In a globalized economy, that means that the entire process that implies the manufacture of a car is not performed 100% by the brand that sells it.You need suppliers.

It is very unlikely that each brand has its own mines and melts to extract minerals and then create the metal parts of the structure, motor train or body.The same as with plastic, cables, crystals, some sensors and other pieces that they will use in their car.

As Gerardo San Román tells us, brands in the national market have some flexibility because many manufacturing issues are carried out in Mexico or have an amount of stock that allows them to endure the movement.This movement sometimes does not manifest permanently, but in waves, which allows us to have some resilience to immediately change.

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In other words, it is not a decision of the manufacturer of "Oh, I will increase my margin because I feel that I am not getting enough."When they depend on foreign suppliers, the trademarks are linked to contracts, and can even be part of the T-MEC agreement, where a certain volume has to be guaranteed.For example, if the same volume of steel is not being purchased, the price of the ton rises.

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The effects of an economic crisis such as the one currently lived can cause the adjustment of costs derived from the economic problems of a company that collaborates with another.A hypothetical example: Toyota's finances are healthy, but Bosch raises the price of its components, so Yaris now costs 10% more.

Si un proveedor que no se puede reemplazar sube el costo de una pieza, la marca tendrá que incrementar el precio del modelo.

The brands have several alternatives to balance the price.They can be forced to lookThe expected gain margins.

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The latter generally happens in more extreme cases, since the shipowners usually look.

Thus the exchange rate enters the game

As the director of Jato Dynamics tells us, the exchange rate factor is the first thing we hit because we live in a global economy, but at the same time the regional economy is extremely intertwined and connected, which generates a great dependence on all Supply Chain.

In the specific case of North America, manufacturers are located both in Mexico and in the United States and Canada.A lot of raw material and labor passes throughout the region, so the exchange rate greatly affects manufacturing, distribution, taxes and other series of elements that influence the final price.

Cars are more expensive, but also better

Until just over a decade we could find models like Chevrolet Chevy, Atos By Dodge or Nissan Tsuru for less than 100,000 pesos.The Ford Focus or Volkswagen Jetta did not arrive did not exceed 280,000 pesos, and even a Mercedes-Benz Class C or a BMW 3 series began its range in 450,000 pesos.

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The aforementioned factors influence the increase in its price, however, comparing a model of 10 years ago with a contemporary one, there is an important gap in efficiency, equipment, technology and, mainly, in security.

Generation after generation, brands present comprehensive improvements to position their models above the competition, but also seek to meet customer expectations and meet the safety and emissions standards that governments impose, which are increasingly demanding.

In this regard, Gerardo San Román mentions that sometimes the client does not understand why a new generation model costs 5% or 10% more than when he bought his own, without considering that he can now integrate improvements in the engine or better security equipment thanBefore they were not available.

To this is added a market where inflation is present and manifested year after year.If the supply and mandate law is taken into account, together with factors already mentioned, such as exchange rate or reactions because of the dependence of the industry to other economies, the result is a cocktail of factors that makes it difficult to keep a price fixed.

Con el avance de la tecnología y el incremento de volumen, algunos elementos pueden bajar de precio, pero nunca van a ser gratis.

The strongest and innovative structures, the resistant and light materials, the manufacturing processes, the development of new assists and everything that implies creating a car that does not stagnate in its usual characteristics, has a price.It is true that technology becomes more accessible over time, and qualities that were only available in luxury categories, today are among low -end vehicles, but it is not free.

Cars such as the Nissan Tsuru spared in structural reinforcements and safety equipment, such as ABS brakes or airbags, to reduce its price.It also launched the market without assisted direction or air conditioner or music player, and although tremendously cheap models could return to the streets following that formula, customers today ask for more standard amenities, and environmental and safety standards have become moredemanding.

It is normal for us to look for more and more in a car, more power, more space, more equipment and more security elements, but do not arrive for free.Check out models that were enough for years ago with 100 HP, but today 140 HP knows little.Add last generation entertainment technologies, more sophisticated computers and you will understand why the price is higher.

Brands will take care of your business.If they notice that their consumers ask for more and that they are willing to pay it, they will give them more.This happens in other industries, such as cell phones.Its basic function is the phone and receive messages, but now a more sophisticated camera, navigation speed and much more than its main function years ago ... with its due price increase, with its due increase in.

Each factor contributes its penny

At the end of the day, no matter how technological the new models, brands seek to balance prices of materials, technologies and production so as not to get too far from the previous model.The truth is that this factor, added to the circumstances of the local economy, inflation, the roller coaster in the prices of the raw material and expenses derived from personnel hiring, end up impacting, little by little, the final price.

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