Car costs up, car sales down

Jill Barshay May 23, 2008
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Car costs up, car sales down

Jill Barshay May 23, 2008
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Renita Jablonski: It’s no secret times are tough for Detroit.
Fewer people are buying new cars, and it’s not just about oil. A new study says a million fewer cars are expected to be sold this year. Jill Barshay has more.


Jill Barshay: Thanks to soaring commodity prices, it costs automakers $750 more to produce a car this year. That’s according to AlixPartners, a Detroit consulting firm.

John Hoffecker is a managing director:

John Hoffecker: The precious metals which go into the exhaust system to make sure that you have clean air, those prices have doubled in the last year. Steel has doubled in the last five months.

Hoffecker says automakers can no longer absorb these costs or force suppliers to shoulder them. That’s spurring them to rethink how they make cars.

Hoffecker: They’re looking at very creative ways, in fact, to use less material in a vehicle.

Or substitute carbon fiber for metal — just like the tennis racket industry did years ago.

I’m Jill Barshay for Marketplace.

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