There has been a massive increase in prices in these years of inflation but in the case of cars the increase in cost is shocking. According to the latest figures from the Spanish tax agency, its average is now 23,531 euros, almost 40% more than the 17,099 paid in 2017. This growth is driven by a number of factors such as the transition to hybrid and electric, an increase in raw materials obtained from the invasion of Ukraine, higher levels of vehicle equipment and the chip crisis, which has prompted brands to prioritize models that give them more power. Give margin. The growth has allowed manufacturers to post record profits, despite sales volumes being well below pre-pandemic levels.
Price increases accelerated late last year, making cars 8.3% more expensive on average in 2022 alone, according to the tax agency. At the beginning of this 2023 the growth has slowed down. This is at least reflected in the INE data, which showed zero inter-monthly variation after a vertical increase over the past three months. The slack may be because chip supply has improved, so there is more supply to meet demand. But there is no possibility of reduction in the price. In contrast, the introduction of new Euro 7 emissions regulations in 2025 threatens another turning point.
As noted by the dealership association, Facconato, “one of the main reasons explaining this growth is the transition from diesel and gasoline to hybrid and electric, which are more expensive.” Technology has changed significantly in recent years: in 2017 only 5% of registrations were of alternative engines (hybrid or electric), while last year their share was more than 41% and equal to gasoline as queen of the road. ,
But this change only explains part of the increase as a detailed report prepared by OCU shows how diesel and gasoline cars are the ones that have grown the most over the past five years. Their conclusion is that “buying a new car with a combustion engine is 40% more expensive now than it was five years ago” and recalls that the CPI has increased by only 15.3% over the same period.
Faced with chip crunch, brands have prioritized vehicles that fetch them the highest margins
In its study, the consumer organization compared the prices of the best-selling models of each brand in 2018 and 2023. In some cases, such as the Peugeot 208 and Dacia Sandero, the increase is over 60%. In the latter case, for example, it has gone from 8,035 euros to 13,040. “However, we must bear in mind that the kits have improved a lot in recent years, so the comparison is not very homogeneous,” explains John Lecu, President of the Bizkaia Dealers Association and Director of Autonervion. In this sense, from Faconauto he recalls that there are safety elements, the so-called Advanced Driver Assistance Systems (ADAS), that “before they were optional and now they are mandatory”.
They also point out at the dealer association that the cheapest cars are most affected by the increase in raw materials like steel as they weigh more in the cost structure. In fact, after these years of growth, cars for less than 10,000 euros have disappeared from the market. The cheapest is now the Mahindra KUV 100, priced at Rs 12,990, and then the Dacia Sandero, at Rs 13,040 above.
Another factor that has affected is that, given the shortage of chips, “manufacturers have prioritized models with better equipment and supplanted the basic ones,” explains John Tolaretxpi, managing director of Ezo Motor. . “This strategy has particularly impressed companies with the greatest demand for simple vehicles,” he says.
The increase especially affects the cheapest models and there is no longer an offer for less than 10,000 euros
For the makers, however, the result has been very positive. Last year they made record profits. According to an analysis by EY’s German subsidiary, 16 main industry groups added profits of 156,694 million euros, a figure that nearly doubles pre-pandemic results. All this when the sales volumes are well below the pre-Covid phase. In Spain, 813,396 vehicles were registered last year compared to 1.3 million in 2018.
There is no possibility of a fall in prices. Brands have been warning for some time that the new Euro 7 emissions rules, which will come into force in 2025, will make combustion engines even more expensive by forcing them to incorporate technological improvements. They demand that the EU review it.