Our family has reached a crossroads, and it's finally time to upgrade the old family wagon to accommodate our growing family. It has been several years since our last car purchase, and I've had no reason to pay any attention to car prices during that time. So I was shocked as we began our search only to find that our budget, being based on an average median household income, wouldn't go very far. I couldn't avoid the big question, what could possibly make a depreciating asset that serves no greater purpose than getting from point A to point B worth so much money? Granted there are many costs that go into manufacturing a vehicle that aren't directly associated with the cost of parts and labor, but that can be the topic for another blog post at a later time. So what is driving the cost of producing a vehicle on the parts side? In such a competitive market as vehicles, there must be a reason for such inflated auto prices. After doing a little research, I discovered an ongoing issue that our government is combating on a global scale. I was surprised to find articles addressing the issues we face relating to auto parts cartels, or in other words, organized crime in the auto parts industry. This is a crime where like manufacturers are colluding and price-fixing auto parts supplied to auto manufacturers. When I think of a cartel, my mind goes straight to imagining a criminal organization running the drug trade. But in addition to chasing drugs across the border, there is an ongoing investigation into colluding auto parts manufacturers underway by the U.S. Antitrust Commission. They are actively seeking and prosecuting those individuals or companies violating the Sherman Antitrust Act of 1890, where auto parts manufacturers are price-fixing and colluding. These criminals are running the risk of being subject to penalties such as hefty fines and imprisonment if their criminal activity is discovered.
So as my search continues for the new family vehicle, and I continue to be baffled by the extremely high cost of a new car, I must now ask myself if I'm being directly impacted by the organized crime ring of auto parts cartels. I guess the high pensions being paid in the auto industry is only one of the contributing factors of inflated car prices.
Car parts price-fixing fines for Hitachi and Mitsubishi Electric
More auto parts cartels uncovered – do sanctions not deter competition law contraventions?