Carmakers Face Supply Price Hikes

Suppliers are indeed charging automakers more for parts, Reuters found when it surveyed several parts makers after Ford said this week it’s experiencing a $1 billion increase in costs.

The suppliers told the news agency that they’re passing on the cost of rising material, labor and energy prices by 7% to 20%.

Ford warned investors on Monday that it would absorb $1 billion in extra costs in the third quarter, thanks for inflation and supply chain problems. The announcement sent its stock into a nosedive for its worst day in more than a decade. Ford said it plans to restructure its supply chain as a result of the unexpected cost hit.

The price increases come as carmakers continue to grapple with supply shortages, including of microchips for electric-vehicle batteries, that have slowed production and squeezed dealers’ inventories.