We're almost done with 2021 but the effects of 2020 are still lurking. All across the automotive industry, shop owners and consumers are in awe when looking at the prices of equipment.
Vehicle costs have skyrocketed which in tune means so has equipment and services. But what does a pandemic have to do with cars and shops? And how much more should we expect prices to increase? Allow us to dive deep into this controversial matter.
The Effects of COVID 19 on the Automotive Industry
Although your car might be immune to the deadly virus, as consumers first and automotive equipment distributors second, our wallets were hit hard.
We've received dozens of emails from loyal customers who thought we've gone mad. 18 months ago a standard two-post lift was $2800, today is $4500. Customers have written questioning why our low prices have taken a spike.
Little do they know, though, that due to the pandemic, the price of raw materials has increased. This has made the cost of vehicles go up the most it ever has since 2011.
The average vehicle is composed of 39% steel and 11% aluminum. The pandemic has made steel a more valuable commodity. According to a report by Bank of America, the average cost for steel used in automotive manufacturing has increased 106% since last year. This increase affects not only the makeup of our vehicles but also the equipment we use to service them.
According to John Murphy of Bank of America Global Research, this increase in pricing should continue well into 2022.
Rise of Steel and Precious Metals in 2021 and Beyond
As much as we'd wish to tell you prices will stay the same, sadly, this is something we can't promise.
January 2021 saw automotive companies increase their prices. This was in large part due to not only steel but rhodium (a precious and rare metal) going up in cost as well.
Other factors such as the limited availability of semiconductor chips have also created a supply-demand crisis.
It is the perfect storm that according to auto economic times, is also affected by higher fuel prices.
How does this Affect Labor and Shipping Costs of Automotive Equipment?
Automotive equipment manufacturers raise their pricing on a yearly basis, this is normal. But the pandemic saw a lack of availability in terms of shipping for most manufacturers.
This led them to raise prices on items such as car lifts, wheel balancers and tire changers. Which in the end saw automotive equipment distributors and consumers be at the end of the hierarchy.
No one knows how long this trend will last exactly. But the one thing that is for certain is with the Delta variant sweeping the nation, this could on even further.
Here's a great doodle video that highlights the surge in prices for automotive equipment. This not only applies to those purchasing a new vehicle. But those looking to build an at-home garage and update their shop.