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Good news for motorists? New car prices are expected to drop as raw material costs plummet

By Tom Gibson | August 15, 2023


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Renault is the first to predict costs will get better for consumers

Good news for motorists? New car prices are expected to drop as raw material costs plummet

We’ve all been battered by inflation over the last 18 months but Renault is predicting things will get better for consumers as the cost of raw materials reduces.

The cost to buy materials such as lithium and steel pushed the price of manufacturing up and, in turn, forecourt prices.

However, as prices begin to settle, Renault’s chief financial officer said “headwinds for raw materials have disappeared” before stating “we’re going into a period where costs should gradually get better.”

Renault appears to be the first to actually make its cars cheaper while still being able to protect vastly improved margins that were keeping shareholders happy.

Its CEO, Luca de Meo, stated the new Clio E-Tech hybrid starts at £21,295, a £900 reduction from the current model. He said: “When there is an opportunity to give some pricing back while continuing to improve margins, that is what we’ll do.”

In a separate forum Tesla boss, Elon Musk, also highlighted the high price of lithium stating that they were ‘insane for a while’, although the price of lithium carbonate has halved since November on the Shanghai Metals Market. 

However, given car makers typically hedge their bets when it comes to offering price reductions and expect that costs will ultimately increase again, it remains to be seen if any other manufacturers follow Renault’s lead and, if so, to what extent.

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