Those who complain that new cars are becoming more and more expensive do not make a big mistake. An analysis by the German publication Automobilwoche shows that the average price of compact models in Europe has increased by 63% from 2002 to 2020. Here are the reasons why the prices of new cars have risen incredibly much in recent years.
Not only the compact segment recorded significant price increases, but also the B segment, where most car sales are located. The average price increase in Europe was, in this case, lower – 59%, it shows Automobile week, citing a JATO Dynamics study.
According to him, the average list price of a compact hatchback (Ford Focus, Opel Astra, Peugeot 308, Renault Megane, Toyota Corolla, Volkswagen Golf, etc.) increased from 18,400 euros in 2002 to almost 30,000 euros in 2020 (+ 63%). Excluding electrified models, prices for combustion models increased by 53% over the same period.
Even if this increase seems substantial, it must be said that it does not take into account the inflation index. If we redo the calculations, we see that 18,400 euros in 2002 is equivalent to 24,756 euros in 2020. Even in this case, we are talking about a 21% increase in the average price of compact cars, which cannot be explained by inflation.
The reasons why the prices of new cars have increased incredibly. Which is the most important
There are several reasons why costs have increased so much over the 18 years analyzed. One of the most important has to do with development costs, which have exploded. Car manufacturers need to comply with the increasingly stringent requirements of environmental regulations, which means cleaner engines and the development of alternative propulsion systems.
In addition, new cars are increasingly technologically equipped, from complicated infotainment systems to highly sophisticated driving assistance systems. In addition to the cost of components, here are added development costs, but also the software needed to operate these systems.
Another reason for the increase is not related to costs, but to the preferences of buyers. As incomes grow, people will buy more and more equipped cars. Affordable financing systems encourage customers to opt for expensive models at the top of the range – the difference in the rate paid being insignificant.
The typical example is the best-selling Volkswagen Golf, whose price increased by 22% between 2002 and 2010 and by another 37 percent between 2010 and 2020. In this case, the mild hybrid and plug-in versions that sell well must be taken into account, along with other versions in the upper area and the numerous performance versions, as is Golf R, which contributes to increasing the average selling price.
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