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Inflation: Driver is the Car
The US consumer inflation has hit a 13-year high at 5.4%. This might force the Fed to tighten its monetary policy, dampening the post pandemic recovery. Who is to blame you ask? Your humble used car. While Energy price was the usual suspect, the spiralling prices of used cars which rose 45% y/y, were responsible for >1/3rd of
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Inflation: Driver is the Car
The US consumer inflation has hit a 13-year high at 5.4%.
This might force the Fed to tighten its monetary policy, dampening the post pandemic recovery. Who is to blame you ask? Your humble used car. While Energy price was the usual suspect, the spiralling prices of used cars which rose 45% y/y, were responsible for >1/3rd of the surge in June inflation. The Manheim index, which tracks used car prices, jumped around 23% since Jan 2021 to 200.4, close to its record high witnessed in May.
The pandemic forced otherwise spendthrift US consumers to save (1Q21: +USD 2.3tn) at a rate not seen since long. As the pandemic situation is improving with vaccination in full-swing and consumers’ wallets full, there is a lot of pent-up demand as people are looking for outdoor leisure activities and personalized travel, pushing car demands higher. On the new car front, the worldwide shortage of semiconductor chips impacted the supply, making new cars dearer as indicated by the new car affordability index surging to 37.0 weeks (of median income) in June; the level last seen in 2012. Another major contributor was car rental companies replenishing the fleet they had sold off earlier to cover their losses amid travel bans.
So, tighten your seat belts, as used car prices may continue to drive the broader inflation at full speed.
Health Now Really is Wealth
The COVID-19 pandemic reinforced the need for a healthier lifestyle and to keep oneself immune from the hazards of the pandemic. The end result was an immense demand for immunity-boosting foods and drinks. Though the demand for such products was always present, the pandemic accelerated the consumption
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Health Now Really is Wealth
The COVID-19 pandemic reinforced the need for a healthier lifestyle and to keep oneself immune from the hazards of the pandemic. The end result was an immense demand for immunity-boosting foods and drinks. Though the demand for such products was always present, the pandemic accelerated the consumption multifold.
One study highlighted that the pandemic has encouraged 45% of consumers in Europe to add more nutrients to their diet, while 29% are more interested in immunity-boosting food. The rush to find that “one immunity” booster can be gauged from the fact that at the peak of the first wave there was a 10x surge in searches for immunity foods and drinks.
Though the numbers have come down in recent times, after witnessing a second spike of a lesser magnitude in May-2021, the search data remains well above the pre-covid era. The pandemic has changed the way we approach our health i.e., now we strive for a healthy lifestyle, and immunity enhancing foods will be a crucial ingredient in achieving this goal. This also gives ample headroom to big brands and start-ups to launch immunity-boosting products. No wonder the global immunity-boosting food products market is poised to reach USD 1.7tn by 2030; a healthier CAGR of 7% over 2020-2030e.
Less For More
Evolving consumer behavior towards environmental awareness has accelerated demand for Electric Vehicles (EV). Though the share of electric cars globally stands just at c.5% (2020), it has improved from mere c.1% in 2015 and is poised to leapfrog to 25-50% by 2030e if one were to believe various projections. So far, the generous government subsidies
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Less For More
Evolving consumer behavior towards environmental awareness has accelerated demand for Electric Vehicles (EV). Though the share of electric cars globally stands just at c.5% (2020), it has improved from mere c.1% in 2015 and is poised to leapfrog to 25-50% by 2030e if one were to believe various projections.
So far, the generous government subsidies were at the forefront of EV adoption. However, the price of the conventional car that stands at almost half of that of EV equivalent is turning out to be the biggest hurdle in the widespread proliferation of EVs. That said, significant progress has been achieved to make EVs more affordable. The EV battery pack cost, which makes up for 40-50% of EV cost, has been steadily on the decline and a recent survey shows that battery cost is set to reduce further with costs expected to decline to < USD 100/KWh by 2025e and < USD 60/KWh by 2030e. This implies a massive 25-55% drop from the 2020 levels (Battery cost: 137/KWh).
Reduction in the cost is possible through the adoption of solid-state batteries that can be manufactured at 40% of the cost of current lithium-ion batteries when produced at scale. Moreover, battery makers are now using different battery chemistries that eliminate or reduce the use of costly materials like cobalt. Other factors that can drive costs lower are efficiency improvements, power-electronics scale economies, and indirect cost reduction based on increased volume.
