Automakers think small as precious metal prices soar

By Chang-Ran Kim, Asia Autos Correspondent - Analysis

TOKYO (Reuters) - Reeling from a relentless rise in precious metal prices, Japanese automakers are banking on new know-how, including nanotechnology, to clean up car exhausts in place of platinum and related metals.

Automakers use platinum, palladium and rhodium in varying amounts in autocatalysts to filter out carbon monoxide and particulate emissions.

While only a few grams go into every car -- compared with more than 2,000 pounds (900kg) of steel -- the high prices result in a cost of roughly $200 per vehicle on average for the platinum group metals (PGMs).

With about 55 million cars sold globally last year, that equates to roughly $10 billion of PGMs, and demand is growing.

Driven by tighter emissions laws, auto industry use of platinum rose more than 8 percent last year and now accounts for some 60 percent of total demand for the metal, which is also used for jewelry.

Platinum prices have doubled in the past two years, jumping by 50 percent from the start of 2008 alone to a record $2,290 an ounce in early March, due mainly to supply shortages from major producer South Africa.

Other precious metals such as palladium and rhodium have also shot up in value.

For a graphic on platinum and palladium prices, click on: here