We all know that the automotive industry is going through a difficult time. The global pandemic has been followed by an unprecedented component crisis that is making it difficult to purchase a new vehicle. There are two main reasons, their high prices and the long delivery times. In fact, it is quite common for it to take several months from the time of the order to the final delivery to the customer. So much so, that some manufacturers only they guarantee the price of the cars for four months.
The point is that there could be situations in which the client have to pay more than what was agreed initially when the order was placed once the car is delivered, months later. And it is not something exclusive to a particular manufacturer, it seems a trend that is being adopted by several due to the current situation. apparently already some do it like Mercedes, BMW, Volkswagen or Kia; who choose not to give binding prices when an order is placed. Or they do, but only by securing it for a limited time.
The reason is the fast price increase in raw materials and components that are used to make the cars, which causes the price to increase during the production process. That leads to Mercedes and BMW contractually guaranteeing the price if “there is a maximum of four months between the date of the purchase contract and the confirmed delivery date when the vehicle is purchased.” If this delivery period is exceeded, the price of the car «changes in the same proportion when list prices change. And the client only has to accept the increase or terminate the contract. In Mercedes that could only be done if the rate increases more than 3%.
On the other hand, other companies like Volkswagen and Kia adopt different strategies. In the German the price is assured if the delivery date has been specified. If the customer places an order with a dealer who has exhausted his quota, he is given a range of estimated prices, as well as the deadline. In the Korean company, a period of seven months has been designated to maintain the price agreed in the order to the factory. Another significant issue is that finance companies are going through a similar problemas they are affected by rapid increases in interest rates.
Luckily, the banks and finance companies of the brands are keeping the initial commitment and they are not raising interest rates for their clients. Although there is also some gap in the contracts and they save that possibility in case the situation worsens. As we said, a rather tricky situation for the sector from which it will be difficult to get out.
Source: Automobilwoche
