China’s Covid lockdown guidelines ship costs larger

Freeman H. Shen, Founder, Chairman & CEO of WM Motor, speaks during Fireside Chat on Day 2 of CNBC East Tech West at LN Garden Hotel Nansha Guangzhou on November 28, 2018 in Nansha, Guangzhou, China.

Dave Zhong/Getty Images for CNBC International

BEIJING — Covid-related restrictions have increased production costs for Chinese electric car start-up WM Motor, even as existing chip and battery shortages are driving up costs, CEO Freeman Shen told CNBC.

“Adding all these things together, this industry is a fast-growing industry, but the cost part of the equation is also going to be a challenge,” Shen, also founder and chairman of WM Motor, said Wednesday.

Sales of new energy vehicles — which include battery-only and hybrid-powered cars — more than doubled last year in China, the world’s largest automobile market. The country has become a hotbed for electric car start-ups and a launch pad for many traditional auto giants making the shift to electric.

China quickly controlled the local spread of the coronavirus in 2020 by imposing swift lockdowns on cities and neighborhoods. But after the emergence of the highly transmissible omicron variant, some analysts started to question whether the costs of the zero-Covid policy now outweigh the benefits.

The impact is already being felt by factories. A Chinese ministry overseeing manufacturing said this month the lockdowns would be a drag on industrial production in the first quarter.

Shen laid out the impact of Covid-related restrictions on his start-up:

  • A chip manufacturer in Malaysia had production problems and stopped delivering to Bosch China, which then stopped delivering to WM Motor.
  • Within China, after Covid cases emerged in Nanjing, one of WM Motor’s battery cell suppliers stopped deliveries.
  • In the last few months, similar disruptions affected two of the company’s suppliers in the Shangyu district of Shaoxing city, near Hangzhou.
  • Covid-related restrictions on the Ningbo port area also stopped delivery from three suppliers there.

“So, all these things were killing us,” Shen told CNBC.

Automakers around the world have cut production due to a shortage of semiconductors. Geopolitical tensions and overwhelming demand for chips in the wake of the pandemic contributed to a shortfall in supply that has lasted for more than a year.

Shen said he expects the chip shortage to improve in the second half of this year, based on conversations with his start-up’s 11 chip suppliers.

Electric car battery shortage

However, he pointed to another looming problem that could get worse: Rising raw material costs for batteries.

Battery-grade lithium carbonate prices were up more than 500% year-on-year as of earlier this month, according to S&P Global Platts. The firm’s survey of industry insiders released this week found that 80% of respondents expect those lithium prices to remain high this year — about four times higher than the start of 2021.

The battery shortage will likely worsen as demand for electric cars in China picks up in the second quarter, Shen said. For 2022, he expects electric car sales in the country to nearly double from last year to about 5 million vehicles.

An electric WM Motor car is seen inside a shopping mall in downtown Shanghai, China, April 26, 2021.

Costphoto/Barcroft Media | Future Publishing | Getty Images

Read more about electric vehicles from CNBC Pro

Reassessing a Japanese manufacturing model

One of the reasons the pandemic disrupted the supply chain is that factories have historically used a longstanding Japanese model of “just-in-time” or lean manufacturing, in which factories only purchase parts as needed to reduce costs and increase efficiency, Shen pointed out .

But now, the strategy is changing.

“In order to make sure you can deliver your car, you probably will start thinking: We have to waste some of our money to keep some stock,” he said. “For a car company, the biggest loss would be losing the sales to your customer.”

Part of WM Motor’s sales strategy is to work with property developers to open test drive sites in more residential neighborhoods, while building up the cars’ autonomous driving capabilities such as in parking, Shen said.

He said the company will need to raise prices to cope with rising costs, as others in the industry already have.

For one, Tesla raised the price for its Model Y in China by 21,088 yuan ($3,300) in December to 301,840 yuan ($47,450), after subsidies. WM Motor’s cars are about half that price.

Travel restrictions affect business

Economists say China’s Covid-related travel restrictions affect consumer spending more than factories.

Cities frequently change Covid testing requirements for travel, while flights and train tickets can get canceled based on newly reported Covid cases.

These restrictions have also affected WM Motor, Shen said. The company has research and development, factory and other business-side operations in Shanghai, Chengdu, Zhejiang province and Hubei province, in addition to about 500 brick-and-mortar stores across the country.

He said the company had to use more technologies like virtual reality and augmented reality to help employees and customers communicate despite travel restrictions.

“We have to use this kind of technology, because if not, the user experience is going to be terrible, and the efficiency is going to be very bad. And we sometimes cannot even get things done,” Shen said.

Asked if he had any IPO plans, Shen said there was no news to announce on the listing front, and cited the pressing delivery issues.

“Obviously people had a lot of expectation, our investor had a lot of expectation, but we are very busy these days to deliver our product,” he said. “Hopefully we can get something to announce in the near future.”

Some ticket costs are up as a lot as 100%

Going out is not only rarer these days, it is also much more expensive.

In general, the prices consumers pay for goods and services have recently recorded their largest year-on-year increase since 1982.

Gas prices alone are up a whopping 58.1% over the past year, and that’s just to get where you’re going.

A table for two isn’t what it used to be either. Restaurants, which have been under pressure since the start of the pandemic, are charging more for meals to counter ongoing staffing issues and higher food costs.

Most have had to raise wages to attract workers, on top of the higher cost of ingredients, and that means menu prices look a little different now.

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Overall, the cost of eating out has risen 6% over the past year, which is also the highest jump since 1982, according to the U.S. Department of Labor (although the cost of Eating at home rose even faster).

According to the National Association of Theater Owners, going to the cinema still costs around the same as it did before the Covid pandemic. At just under $10 per person, it may also be the best deal.

On the other hand, the costs of attending almost all other events increase.

In 2019, an artist’s concert ticket averaged around $96, but this year’s ticket prices are on track to hit record highs as Billie Eilish, Coldplay, Justin Bieber, John Mayer and The Weeknd take to the streets.

If sports are more your thing, NBA and NHL tickets average about $94 per seat, according to SeatGeek data, while the average ticket for an NFL match without playoff games costs even more — about $151 , found SeatGeek. If you can score one at all.

In the secondary market, where many of these tickets are bought and sold, the average resale price per ticket has increased by about 28% for sporting events and by about 45% for concerts since the pandemic began.

For example, the average resale price of an NFL ticket went from $198 to $237.

For art lovers, it’s a similar story.

The Metropolitan Museum of Art in New York, which houses one of the largest collections in the world, used to have a “suggested donation” for attendees, which is now limited only to residents of New York State and students from the tri-state area. All other visitors must pay $25 for a general admission ticket.

Other museums, including this The Modern Art Museum of Fort Worth and the Crocker Art Museum in Sacramento, Calif., have increased ticket prices by at least 50%, according to a report by coupon and deal site DealA, which compared the price of an adult general admission ticket last month at prices in 2017.

Ticket prices for other attractions, which have also been badly hit by the Covid restrictions, have skyrocketed by much more – up to double what they were before the pandemic, DealA noted.

For example, Funland amusement park in Rehoboth Beach, Delaware, costs $30 to visit today, up from $15 a few years ago. Dollywood in Pigeon Forge, Tennessee; Sesame Square in Bucks County, Pennsylvania; and Santa’s Village, New Hampshire’s Christmas theme park, increased admission prices by 22%, 29% and 50%, respectively, over the same period.

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New and used automobile costs hold climbing. Don’t count on aid quickly

When it comes to car purchases these days, sticker price can be a sticker shock.

The prices for new and used cars continue to rise in view of the strong demand and the shortage of stocks. While the slowdown in production has improved slightly, there will be no return to normal for car buyers anytime soon.

“The typical dealer experience that consumers are familiar with – dealer lots with rows of cars, negotiating the price and lots of incentives – is unlikely to return this year as it is 4.5. are [million] 5 million consumers waiting on the sidelines for cars, “said Tyson Jominy, head of data and analytics at JD Power.

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“This backlog will keep inventory levels low and prices high for most of 2022,” Jominy said.

An ongoing global shortage of microchips – key components needed to power today’s cars – that began in 2020 continues to slow manufacturers’ production of new vehicles, which has resulted in demand exceeding supply.

“It’s a little better in that there is no more inventory loss – it doesn’t get worse,” said Ivan Drury, Edmunds.com senior manager of Insights. “But we’ll talk to each other for many months until it looks more normal.”

The average transaction price for a new car is now higher than the manufacturer’s suggested retail price, or MSRP: $ 45,872 versus $ 45,209, according to the latest data from Edmunds.

An estimated 89% of buyers pay more than or within 5% of the sticker price, Jominy said.

One reason for the record transaction prices is that automakers have cut their discounts because they generally don’t have to offer big incentives to sell cars.

In other words, new cars don’t stay long in a dealer parking lot: in December, an estimated 57% of cars were sold within 10 days of delivery, according to JD Power. The average time it takes a new car to sell off the lot is a total of 17 days, a record low and less than 49 days a year ago.

Demand has also expanded into the used car market, where buyers are paying an average of $ 29,011, up 27.9% from a year ago, data from Edmunds shows. That ranges from an average of $ 14,124 for a 9-year-old car to $ 30,334 for a 3-year-old vehicle.

One bright spot, Drury said, is that demand for used cars has driven trade-in values ​​well above normal.

“Buy this trade-in,” he said. “Don’t get rid of old assumptions about mileage or depreciation because all that stuff is on the doorstep.”

And while you should be prepared that there is little wiggle room on the price of the car, you may be able to negotiate the value of your trade-in.

In addition, interest rates are generally low at the moment.

“You can still get cheap money,” said Drury, adding that there are still 0% or 0.9% financing offers depending on the make and model you are looking at. Otherwise the average interest rate for a new car loan below 4%, according to Bankrate.

If you are flexible in terms of time when purchasing and cannot find what you are looking for on the dealer lot, it can be worthwhile to order your car.

“Although it can take four to eight weeks for the vehicle to arrive, it will be built to your exact specifications such as features and color,” said Jominy. “And now, some automakers will be incentivizing pre-orders that consumers won’t have when they buy what’s in stock.”

Bubblicious used automobile costs rising sooner than bitcoin, Jim Bianco warns

Your car may be more valuable than what’s in your portfolio.

According to market researcher Jim Bianco, used car prices are rising faster than Bitcoin and other assets.

“If you want to know what’s the best investment you’ve likely had in 2021, it’s this car that’s in your driveway or garage,” the president of Bianco Research told CNBC.Trading nation“on Thursday.” It is appreciating faster than the stock market and lately faster than some cryptocurrencies. “

He bases his analysis on the Manheim used car price index, which is designed to track price developments in the market.

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“In the last four months the price has increased by more than 20%. Not only is this more than the S&P, but more than Bitcoin itself in the past four months, ”he said. “As of December 15th, the latest data we have is just accelerating. At least until now there has been no peak.”

Bitcoin is up about 5% over the past four months based on Thursday’s market close. the S&P 500 has increased by 26% so far this year.

Bianco cites two optimistic drivers in the used car market. The first are those that are falling out of new cars due to semiconductor shortages.

Read more about electric vehicles from CNBC Pro

Kelley Blue Book reports that car prices are at record highs. In November, the median price of a new car was $ 46,320 and a used car was $ 27,569, a 27% increase over the same time last year.

The second: speculators who want to turn vehicles over.

“What we see in used cars is a rush for people to buy them and a rush for people to speculate on them,” he noted. “Buy it now, it will only get more expensive.”

“Tell-Tale Signs of a Bubble”

It is clearly not your parents’ auto market.

“It has all the tell-tale signs of a bubble,” he said. “Used car prices are supposed to be a depreciation factor. They shouldn’t increase in price. But this year they have increased by 49%, let’s call it 50%.”

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Bianco suggests the shock with car price stickers reflects a bigger problem.

“That’s exactly what they have [Federal Reserve] I don’t want this to happen because that’s this self-reinforcing idea of ​​inflation, “he noted.

Last December on Trading Nation“Warned Bianco that 2021 could be the first inflationary comeback in a generation.

He believes inflation will fall in 2022, but its fall will be much slower than most people think. As for a peak in car prices, Bianco suggests it’s everyone’s guess.

“It could go on for another year. It could be two more weeks,” said Bianco. “The activity you’re seeing is likely bubbly.”

Disclaimer of liability

In Britain, Rising Costs and Shortages Evoke 1970s-Fashion Jitters

For the opposition Labor Party, which struggled to attack the government despite the pandemic-inspired national solidarity, beating the Tories over the high cost of living is a simple strategy. Some analysts predict a series of humiliating reversals for Mr Johnson, starting with the potential impact of the tax hikes.

“When articles are written in conservative newspapers about a return to the seventies, it is a blinking red sign of conservative government,” said Tony Travers, professor of politics at the London School of Economics. He noted a maxim in British politics: “Opposition does not win elections; Governments lose them. “

The specter of fuel shortages appeared to be greatest on Friday. Long lines formed at some petrol stations in London while others reported that they were working normally. Priya Dela, a cashier at a busy Texaco station in West Norwood, southeast London, said her gas station may run out of fuel at the end of the day.

Ragu Thangavel, a manager at an Esso station in Brighton, said he was out of diesel by Friday morning and he expects to run out of fuel by evening. “There have been long lines since this morning,” he said, adding that he had not been told when his next delivery would arrive.

Oil giant BP said several of its gas stations had closed due to a lack of unleaded and diesel fuel. Tesco, a supermarket chain that operates gas stations, said it is temporarily closed in some areas. The problem is not the fuel supply, said Gordon Balmer, executive director of the Petrol Retailers Association, but the lack of trained truck drivers for transportation.

The challenge of finding and paying qualified drivers affects not only the fuel sector, but other sectors as well. With drivers retiring and approval replacement being delayed due to the pandemic, the labor pool has shrunk despite increased demand. That drove up wages. Tom Binks, the managing director of Peter Green Chilled, a refrigerated and frozen food transport company, said he had to increase the pay of his 60 or so drivers by 35 percent since April to keep them.

Woodland Park patio drink spot 110 Reserve has Breck type and costs | Meals & Drink

The two month old 110 Reserve comes as an extension of Miss Priss Women’s Clothing Store and owner of both, Pamela Mikesell. It’s a very inviting porch / deck / breezeway mini-bar with a view of the highway and Pike’s Peak and wouldn’t be out of place in Breckenridge in terms of design.

A credit is required for this, but you don’t have to charge Breck prices for simple cocktails. Like an inexplicably high vodka from Tito’s $ 15 Bloody Maria – the cost of a killer cocktail at one of Denver’s high-end spots – that’s heavy on the celery salt and drinks like any $ 5 brunch special anywhere, though candied bacon goes with celery, cucumber, olive and salami slice garnish fits.

When you go

110 W. Midland Ave., Woodland Park, 719-640 9663, facebook.com/110ReserveBar

As fine and refreshing as their Don Julio silver Cucumber margarita is, with fresh fruit and homemade lime syrup and luckily no BS mixes, $ 12 still feels a few dollars high.

Our Chicken satay bowl, colorful and beautifully presented with carrot shavings nested on a rice mound, surrounded by edamame drizzled with dressing, broccoli, cabbage, and sliced ​​bird pieces, is at least $ 4 overpriced at $ 16 for the portion and overall finish, inclusive lumpy rice and fairly dry meat with no juice.

For our money, we are most satisfied with a $ 4 snack bowl of warm mixed nuts encased in a fabulous rosemary spice.

How a lot cash you must make to reside in Horry County; dwelling costs enhance within the Grand Strand

Ocean Boulevard in Myrtle Beach in March 2020 (Photo: Nick Papantonis / WPDE)

MYRTLE BEACH, SC (WBTW) – Myrtle Beach is a popular vacation spot, but more and more people are moving to live in the area each year.

Home costs are rising along Grand Strand. As more people move here, you might be wondering how much you need to make to live in Horry County.

According to a Massachusetts Institute Technology calculator To live in the Myrtle Beach, Conway, and North Myrtle Beach areas, a single person without children must earn $ 15.13 an hour.

Read more here.

ON THE MONEY: chop reworking prices when wooden costs are excessive | Enterprise

Timber costs have skyrocketed in the last year, giving budding home renovators a choice of whether to wait in the price purgatory or move forward and possibly overpay.

Lumberjacks falsely predicted that the housing market would collapse under the weight of the pandemic instead of booming as before, says David Logan, senior economist with the National Association of Home Builders.

This “fatal mistake,” as Logan calls it, created a mismatch between supply and demand, which, according to data from Fastmarkets Random Lengths, a specialist publication for the timber industry.

By mid-July, timber prices had only dropped to double their spring 2020 levels, but whether the decline will continue and when lower prices will hit homeowners is not yet clear, Logan says.

Here are tips to navigate a home remodeling when the wood costs are going through the roof.

CREATING ROOM FOR VARIABILITY

The recent drop in prices may seem like a positive sign, but Logan compares the dilemma of home remodeling to that of a homebuyer: There’s no telling when the time will be right.

“Trying to time the market is likely to cause more fear than knowing that you will get things going,” he says.

Logan says if he did a renovation, he would move on to a major renovation, like a kitchen upgrade or a room addition.

If a project requires months of planning and waiting, allow room for price and schedule changes in your contract, says Ethan Landis, principal at Landis Architects / Builders in Washington, DC. This way you won’t pay too much if prices drop before your contractor starts buying, but you can still hesitate if the project gets too expensive.

SEARCH FOR ALTERNATIVES, PLAN FOR SCARCE

If a little DIY or good to big update could wait a few months, Logan says he would take the risk and wait for wood to become more affordable.

“I know full well that by the time I do it, the prices could be higher,” he says.

In the meantime, look for recycled, reclaimed, or alternative materials.

Ty Lindgren, a shift supervisor at a food and beverage company in Olympia, Washington, brought back leftover wooden pallets from work to build a playhouse for his children.

He estimates the cost of the project was reduced from $ 1,000 to about $ 100 when the pallets were used in place of the high-priced two-by-four pallets.

If you don’t have access to additional unclaimed wood, you can buy it.

Habitat for Humanity’s ReStore has over 900 locations, many of which sell recycled wood or wood items that you can rehabilitate or turn into something like shelving. In some locations, you can search your inventory online.

Your local wood or flooring liquidator may have enough wood to renew the flooring in a small room or on a single floor of your home, says Rebekah Hernandez, a Dallas-based interior designer.

“You can’t be choosy because there aren’t many options, but they are out there,” she says.

Affordability first

If you decide to postpone the project to wait for lower prices or to save, Hernandez says small changes like a new rug, decorative pillows, and updated art may do for the time being.

“All of these things, while subtle and minor changes, ultimately help make you feel happier and better in your space,” she says.

A renovation out of pocket is always the cheapest way. But only fund the project if you can get a low interest rate and affordable monthly payments, says Larry Pershing, a Chicago-based certified financial planner.

Pershing says home equity lines of credit have low interest rates and you can typically withdraw the money over a 10 year period. That means you can borrow as much as you need, up to your limit, whenever you need it when a large project has unpredictable costs and schedules.

An FHA 203 (k) loan enables home buyers to combine the cost of a fixer upper and renovations into a single mortgage. Pershing recommends them for homebuyers who do not already have a lot of equity.

A home finance loan provides project funding quickly, and you can often pre-qualify to estimate your monthly payments and interest costs.

With a flat rate loan like a personal loan, try to keep an eye on a final price. If wood prices go up, you can’t go back and borrow again.

Used automotive costs to remain excessive till automakers repair manufacturing points

If you’re waiting for used car prices to fall, check out the latest advisories on how a sign that prices have already started fallingsays one of the largest used car salesmen in the United States not to be too excited.

The rise in used car prices is unlikely to slow until manufacturers can start producing cars at pre-pandemic prices, according to the CEO of Carvana.

“[Used car sales] The volume is pretty much in line with 2019, it hasn’t changed that much – the main difference is that so much fewer new cars are being made and that is driving prices up. “Ernie Garcia, CEO of Carvana, said on CNBCs”Squawk box“on Friday.” I think up the supply chains on [original equipment manufacturers] Find out that it is likely to have a lasting effect. “

Automakers have struggled to maintain production in the face of the shortage of semiconductor chips.

fordthat had to cut his North American vehicle production in July and August due to shortages, the earnings report for the second quarter said that the supply was improved but that it lost production of about 700,000 vehicles during the quarter.

General Motors said the chip shortage will reduce its revenue by $ 1.5 billion to $ 2 billion and has been idle some of its North American assembly plants due to scarcity.

Nissan said in May it probably half a million fewer vehicles this year while BMW recently warned that the shortage will creep in by 2021.

The chip shortage will cost automakers an estimated $ 110 billion in lost sales this year, according to a May report by consultancy AlixPartners.

Used car companies see sales increase

Customers inspect a Fiat Chrysler Automobiles NC Dodge Grand Caravan minivan at a Carvana Co. location in Westminster, California, United States on Thursday, May 28, 2020.

Patrick T. Fallon | Bloomberg | Getty Images

The drop in production was a boon for used car dealers like Carvana. The company reported its first profitable quarter on Friday, posting net income of 45 million a year ago in the second quarter of 2021, and for the first time in its eight-year history, it sold over 100,000 cars in a quarter. Carvana stock is up 44% this year through Friday.

These gains have been accompanied by a large increase in used car prices. The average transaction price for a used car was $ 25,410 in the second quarter of 2021, down from $ 22,977 in the first quarter and 21% year over year. according to dates from the online automotive resource Edmunds. That number marks the highest average price over a quarter for a used car that Edmunds has ever tracked.

Debate over when used car prices level off

These high prices have helped boost the used car industry.

EchoPark Automotive, a division of Sonic Automotive that sells used vehicles set a record quarterly earnings of $ 595.6 million, up 88.9% year over year. Retail sales grew 68.9% year over year.

CarMax, the largest used car dealer in the U.S., recorded in the first fiscal quarter of 2022, which ended on 31. The company said it sold 452,188 units through its retail and wholesale channels during the quarter, up 128% year over year.

Regarding when prices might level off, Garcia said, “In the next six months, or even 12 months, I think it’s hard to say.”

“What we are finding is that OEMs supply chains are perhaps a little more fragile than we all would like, and that thousands of parts are being made around the world and waves of covid popping up in different parts of the world I think that makes it really difficult predict when that will return to normal, “he said.

By comparison, Jeff Dyke, President of Sonic Automotive, recently said on CNBC’s “Worldwide exchange“that he expects the chip shortage to ease in the coming months, what start lowering the price of used cars.

“The new car stocks will get better and better in the next few months towards the end of the year,” said Dyke. “This will reduce the number of inventory problems on the used side.”

Jim Cramer says flood of IPOs is weighing on inventory costs

Investors can expect stocks to remain under pressure as long as the market is flooded with new public offerings, CNBC’s Jim Cramer said Thursday.

“A lot of stocks are hit here because there isn’t enough cash to buy all of the junk that has been created lately,”Bad money“said the host.” Inventories are falling because, like goods in a store, there is simply too much inventory to be devalued. The speculators are always the first to go. “

The second half of 2021 is Wall Street Digesting a long list of IPOs that came in the first six months of the year. In the first half of the year, more than 210 IPOs grossed more than $ 70 billion. June was the single month with the highest turnover for the IPO business for almost 21 years.

The IPO market practically separated the bond market, typically a predictor of the overall economy, from the stock market, Cramer said. If the IPO flood continues, stocks will continue to decline under their own weight, he said.

“If we get some respite from new underwriting and the earnings are still good, I’ll stay a cop, but you have to stop the new offering,” said Cramer. “Stocks go down because people have to sell. They don’t want to lose money.”

The Dow Jones industry average rose nearly 54 points, or 0.15%, to close at 34,987.02 on Thursday.

The S&P 500 slipped 0.3% while the Nasdaq composite declined for the third session in a row.

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CNBC’s Bob Pisani contributed to this report.