Are new cars too expensive?

On Monday this week I watched Channel 4’s ‘Dispatches: Why Is My Car So Expensive?’ A documentary hosted by motoring journalist Ginny Buckley.

As someone with 24 years’ experience working alongside the motor industry (which I love) I came to the programme expecting the usual sensationalised ‘Rip-off Britain’ doom mongering we’ve come to expect from the media these days.

Times Radio summarised the show: ‘What's the real story behind the soaring cost of new and second-hand cars? As the car industry pulls in huge profits, Dispatches has top tips on how not to get ripped off.’

The programme covered recent new car supply issues due to semi-conductor shortages and the knock-on effect on used car prices. It then highlighted what it called ‘soaring’ profits in the industry.

Fair enough surely? The world runs on supply and demand of course. Increased profits are expected if margins improve. Can you really blame manufacturers, businesses or in fact consumers for being enterprising? The market decides after all.

The programme then moved on to theft (catalytic converters & vehicles themselves), expensive hire cars, and repaired write-offs. All things that have been going on for as long as I can remember and again not something I feel car manufacturers are responsible for.

But then the programme explained a typical base Ford UK Fiesta 10 years ago would have cost less than half a typical annual salary, but now it’s more like two thirds. Now that did get me thinking and wanting to do a bit of digging…

So are new cars really too expensive, what exactly does that mean and whose fault is it?

Well step back to 2013 with me and my research show the average price of a new car was £27,219 according to Auto Express. That’s lower (when adjusted for inflation) than the £12,207 it would have been 25 years earlier in 1988.

And because buyers were getting substantially higher levels of comfort, performance, economy, and kit, they were seeing even greater benefit. The only downsides were insurance and petrol had gone up significantly.

If I run that logic forward, things haven’t changed that much in 2021. Using This Is Money’s price and inflation calculator I can see that 2013 car would now be £ 34,245.45.

A quick check with Office of National Statistics (ONS) shows average car prices in the UK in 2021 were £29,018 for Petrol & Diesel and £36,633 for Hybrid & Electric.

Well below inflation for petrol and diesel then, and not hugely above inflation for a completely new powertrain! One that also offers significant savings when it comes running costs. It looks like maybe the automotive industry isn’t the complete rip off it’s being portrayed as.

Do consumers now have higher expectations of their cars when it comes to options and tech? Almost certainly. Are there more options than ever for financing? No doubt. Therefore, as with any major purchase common sense needs to be applied.

What do you think? I am running a Linked In pole to see what people feel, you can have a look here as to what the outcome is.

If you work within automotive, be it a retailer or at brand level, we’d love to understand your view and talk to you about the future of auto retailing. Why not schedule a FREE 30-minute assessment today here? It will be well worth your time.

Or alternatively read more about Local Marketing on our blog page "Local Thinking': https://www.weareacuity.com/local-thinking-our-blog

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