How much was the inflation in the car market?

According to Tejarat News, the Statistics Center of Iran reviews the producer price index of the industrial sector once every three months. Construction of motor vehicles, trailers and semi-trailers as one of the subdivisions of the industrial sector of the country in this quarterly report of the Statistics Center is considered. But what is the producer price index? Producer price index is the rate of change in the price of goods and services purchased by a manufacturer or service company and sold after the final product has been produced.

The main difference between the producer price index and the consumer price index is in terms of looking at the prices of goods and services. Producer inflation index of the industrial sector shows changes in production costs over a period of time. This index is calculated by measuring the prices that the producer faces in the production process.

In the economic literature, this index is referred to as a leading index, because changes in this index are expected to be reflected in the consumer price index with a time lag. According to a report published by the Statistics Center of Iran, seasonal producer inflation in the entire industrial sector reached 9.9% during the fall of this year.

This number has increased by 0.1% compared to the number of this index in the fall of 1999, which was recorded at 9.8%. A review of data published by the Statistics Center of Iran shows that the producer inflation index in the construction of motor vehicles, trailers and semi-trailers in the fall of 1400 compared to the same period last year has experienced a growth of about 36%. As mentioned, this report is published quarterly, so a comparison of producer prices in the fall of 1400 with the previous season (summer of this year) indicates a growth of about 9.5 percent.

But the Statistics Center report shows that the annual inflation of producer prices in the construction of motor vehicles, trailers and semi-trailers in the four seasons leading up to the fall of 1400 has seen an average growth of about 50%.

We now turn to the trend of the producer price index in the three seasons of spring, summer and autumn compared to the previous season. A review of the Statistics Center report shows that the car producer price index in the spring of this year compared to the winter of last year has recorded a growth of about 2.6 percent in the record. This index has seen a growth of 3.5% in the summer season this year compared to the spring season.

This trend is still upward in the fall and we see that the producer price index in the construction of motor vehicles, trailers and semi-trailers has grown by 9.5 percent compared to the previous season.

But if we want to examine the point-to-point trend (compared to the same season last year) of the three mentioned seasons, we see that the producer price index in the spring of 1400 compared to the spring of last year, has experienced a growth of more than 60%. The car manufacturer’s price index has also grown by 39% this summer compared to last summer.

But this year’s autumn report, compared to the fall of 1999, shows that the producer price index in the construction of motor vehicles, trailers and semi-trailers has grown by about 36%. The average annual inflation of the car producer price index in the four seasons leading up to the spring of this year was about 58%. In the summer, the annual inflation of this index reached about 54% and finally the study of the experts of the Statistics Center shows that in the four seasons leading to this autumn, the annual inflation of the producer price index in the construction of motor vehicles, trailers and semi-trailers was about 50%.

We are witnessing a rise in consumer prices at various times when automakers are still forced to sell their products at regulated prices. Price dictation to car companies has prevented them from setting the selling price of their product in a way that covers the cost of the car, and this leads to the supply of loss-making products. In other words, not only car companies do not deposit profits into their accounts before selling their products, but they also invoice production cars at a loss for their customers. The upward trend in accumulated losses in car companies illustrates this well.

Components affecting the price index

But what items have affected the price index of manufacturers in the automotive chain and caused this index to grow compared to the previous season, compared to the same period last year, as well as annual inflation in the four seasons leading up to the fall of 1400? Undoubtedly, the increase in the price of inputs used in the country’s automotive chain is the first item affecting the increase in the producer price index in this sector.

Of course, this item itself is affected by the headline inflation rate as well as exchange rate fluctuations. Activists in the country’s automotive chain are forced to buy their inputs on production lines at much higher prices than last year, which increases the average consumer and producer price.

A review of the latest available information on the price of raw materials and production inputs used in the automotive chain shows that the activists of this chain in the summer of last year prepared an average of 14,000 tomans per kilo of cold sheets used, but the price of these required raw materials The automobile chain in the summer of 1400 with a growth of about 8700 Tomans reached around 22700 Tomans. This price jump shows that the price of cold rolled sheet has experienced a growth of about 62% in a one-year period.

A review of the price of hot rolled sheet also shows that in the summer of 1999, this raw material needed by car manufacturers was provided to them at an average price of about 10,300 tomans per kilogram. But in the second season of this year, if the activists of the automotive chain intended to provide hot rolled sheets, this raw material could be purchased at a price of 19,800 tomans per kilo. The price of each kilogram of hot rolled sheets in the summer of this year has increased by around 9,500 Tomans compared to the average price in the summer of last year, which has increased by about 92% compared to the announced range last year.

An analysis of the average price of aluminum in the summer of 1400 compared to the summer of last year shows a growth of about 57%. In the summer, 99 aluminum was available to applicants at an average price of about 41,600 tomans per kilo. But this summer, if the car chain activists wanted to buy aluminum, they would have to pay about 65,600 tomans per kilo. Therefore, we are witnessing an increase of about 24,000 Tomans in the price of aluminum per kilogram. Copper prices also rose by about 53% in the period under review.

Copper used in the production lines of the automotive chain in the summer of this year was priced at about 212 thousand tomans per kilogram, but last year in the same period the average price per kilogram of copper was about 138 thousand and 200 tomans. Therefore, in a period of one year, the price of this product needed by the automotive chain has increased by around 73,800 tomans per kilo. Polymeric materials have not lagged behind the price increase and have recorded a price growth of about 57% in their record.

The polymer materials used in the construction of the car increased by about 18,700 tomans during one year, ie from the summer of 1999 to the summer of 1400. Last summer, applicants had to pay about 32,600 tomans per kilo of polymeric materials, but this summer, due to the increase in prices, automotive chain activists had to pay about 51,300 tomans per kilo of polymeric materials they needed. As mentioned, the price of your production inputs is affected by two other items.

These two items are the general inflation rate of the country as well as exchange rate fluctuations. At present, these two items are not in a good condition, and this has caused a turmoil in the market of raw materials and inputs. The general inflation rate causes the prices of goods and services to rise. On the other hand, a study of the market of production inputs and raw materials shows that producers of raw materials provide their manufactured goods domestically based on world prices to applicants. Therefore, in addition to world prices, the prices of raw materials and inputs are also affected by exchange rate fluctuations. A study of the prices of production inputs over a period of one year, from the summer of 1999 to the summer of this year, showed this well.

This situation will challenge the actors in the automotive chain as long as the shadow of sanctions is on the country’s economy as well as the automotive industry. Therefore, we must consider the discussion of sanctions along with the increase in the country’s general inflation rate and also the fluctuation of the exchange rate as three components affecting the producer price index.

Source: the world of economy