Despite Sojae Price Surge... Will Car Prices Accelerate?

Even with All Essential Material Prices Soaring
Automobile Prices Only Slightly Increased
Semiconductor and Urea Solution Crises Also Overlapping
Price Hikes Inevitable if Prolonged

[Asia Economy Reporter Ki-min Lee] Although the prices of major automotive materials surged throughout this year, Hyundai Motor Company and Kia only raised car prices slightly. However, if the price hike trend of materials does not subside amid the prolonged shortage of vehicle semiconductors and the shortage of urea solution inventory, it is expected that car price increases will be inevitable.

According to the quarterly reports of Hyundai Motor Company and Kia on the 22nd, as of the third quarter of this year, the prices of essential materials for automobile manufacturing such as iron ore, aluminum, copper, and plastic have risen sharply compared to the previous year.

Iron ore, the material used to make car bodies, surged to $165 per ton, nearly doubling from $85 in 2019. It also increased by 63.4% compared to $101 last year. Another major component material, aluminum, rose 39.9% from $1,704 per ton at the end of last year to $2,384 in the third quarter of this year. Copper also jumped 48.6% during the same period. Plastic, used in bumpers and interior materials, recorded $955 per ton last year but rose 23.7% to $1,181 in the third quarter of this year.

The surge in major material prices has partially affected car prices as well. In the first half of this year, the average price of Hyundai passenger cars was 43,996,000 KRW, up 5.19% from 41,823,000 KRW last year, but in the third quarter, it recorded 47,587,000 KRW, an 8.16% increase. Recreational Vehicles (RVs) only saw a slight increase from 41,774,000 KRW to 42,083,000 KRW.

Kia’s (domestic standard) average passenger car price also rose slightly to 33,634,000 KRW in the third quarter (compared to 33,090,000 KRW last year), up from 33,445,000 KRW in the first half of this year. RVs also surpassed the 40 million KRW mark for the first time, rising from 36,262,000 KRW to 41,402,000 KRW.

Industry insiders say that although Hyundai and Kia’s vehicle price increases were not large compared to the surge in major material prices, if material prices do not fall to early-year levels by the end of this year or if prices of materials that had maintained usual price levels rise, vehicle prices could be increased. Although the price of iron ore, which accounts for the largest share among vehicle materials, recently fell below $100, there is still a possibility of it rising again. The price of scrap metal, which is considered an eco-friendly recycled material and a substitute for iron ore, has also risen about 30% compared to the beginning of the year.

In the case of magnesium, used in engine blocks and steering wheels, major producing countries like China are reducing production due to power shortages and coal phase-out policies. According to the Korea Mining Industry Association’s Korea Resource Information Service, the price of magnesium per ton rose more than threefold from $2,330 in January to $7,596 last month. Although it dropped to around $4,800 this month, it is still more than double the price at the beginning of the year.

An industry official said, "We are not immediately raising car prices without model year changes or facelifts (partial changes), but if the surge in material prices prolongs, it could be a factor to consider price increase measures."

This content was produced with the assistance of AI translation services.