Car prices continue to rise (and electric remains expensive)

Buying a new car is more difficult than ever. In addition to availability issues caused by supply chain constraints and lack of semiconductors, people looking for a new car are experiencing a dramatic increase in prix.

It’s not just about which car and how long you should wait for it; it’s also about paying more for the same car you could afford a few years ago.

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The situation is quite complex, especially in Europe and the United States. A study conducted by JATO Dynamics indicates that the average retail price (excluding any form of discount, rebate or public incentive) of gasoline passenger vehicles available in the United States increased by 14% between 2015 and 2022. According to the consultancy, that price jumped from €39,143 in 2015 to €44,641 this year. This represents more than 5000 € in just 7 years.

Disparities between countries

In Europe*, growth was more significant. Buying a brand new petrol car cost €35,500 in 2015. This year, through June, the average retail price of cars available there was €44,101. This is a massive increase that reflects automakers’ focus on higher segments.

In countries like Norway for example, the variation was huge, with prices jumping from €42,199 to €68,677. Regulations that clearly aim to eliminate sales of cars with internal combustion engines explain this 63% increase. In other markets such as the United Kingdom, the devaluation of the pound has accelerated the rise in prices, from €32,247 in 2015 to €46,230 at the end of June 2022.

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In contrast, the Chinese market saw a tiny 5% increase over those years, mainly because supply expanded down the segments. Micro cars and small SUV contributed to the contained increase between 2015 and 2022.

Electric is not yet an alternative

While gasoline-powered cars are now less affordable for much of the population, their electric counterparts fare no better. With the exception of Norway and in some cases China, the rest of the world still cannot afford most of the electric models available today. And without the aid offered by certain governments, the situation would be very different with regard to the growth in demand for these cars.

In general, a consumer must pay up to €55,821 to buy a new electric car in Europe, €63,864 in the United States and €31,829 in China. Excluding the large gap between the latter and the West, the reality for consumers is that electric cars are not yet a serious and affordable alternative to the rising price of gasoline-powered cars.

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Brands that sell cars in Europe and the United States have positioned electric vehicles as premium cars, focusing on high-end segments. Most of the supply found in these markets is made up of luxury sedans and SUVs, although this has started to change with the introduction of cheaper cars, such as small SUVs, city cars and hatchbacks. compact.

Therefore, the industry and its consumers face a daunting challenge: to ban polluting cars and promote clean cars, while providing a real and affordable solution for the masses. China is working on it, the West should pay attention to it.

*Germany, Italy, France, United Kingdom, Spain, Netherlands and Norway.