The chief executive of Japanese car maker Nissan has signalled an increase in prices of its vehicles, saying car makers had no choice because of soaring raw material costs.
Carlos Ghosn told shareholders surging prices of steel and other materials were the single most important challenge facing the industry.
'The size of the increase and the impact it has on cars is impossible to absorb,' he said. Mr Ghosn said the car industry had been weakened by a culture of never increasing prices.
Anglo-Australian mining giant Rio Tinto said this week that it had agreed on a near doubling of the price of its iron ore - a vital raw material used to make steel - to Chinese group Baosteel.
Mr Ghosn said Nissan was facing 'severe headwinds' from higher material and energy costs, the weakness of the US and Japanese economies and a stronger yen, which is bad for overseas earnings.
Nissan is pinning hope on the fast-growing markets of China, India, Russia and Brazil to help drive up its future earnings.
Meanwhile, Swedish car maker Volvo, which is owned by Ford, plans to cut 2,000 jobs worldwide, most of them in Sweden. The group said a weak US dollar and rising raw material costs had led to a a loss in the first quarter of the year of €97m.
