Prices for new cars continue to rise: it is a common complaint and hard figures support it. But how extreme are these increases really? In search of the answer to this, we analyze the car prices of now and then.
Driving is an expensive hobby. We regularly receive reader e-mails complaining that the cars we test are so expensive that they are barely accessible for many people. Earlier, in Techzle 14, we already made an overview of the nine cars that you can still buy new with a budget of up to € 15,000. If we take up price lists from a long time ago, it soon becomes clear that the prices of cars have indeed gone through the ceiling in recent decades. Nevertheless, that first impression deserves some nuance.
To begin with, most things have risen in price over that period (what we call inflation in the economy), but on the other hand, incomes have also gone up. These factors together determine purchasing power. When incomes rise faster than prices, purchasing power increases. It is therefore important to compare the price development of new cars over the years with the incomes over the same period. That, too, does not say everything, because you may have started to earn more, if you spend much more on other, more important necessities of life (think of the rising housing costs as a result of the overstrained housing market), then there will be less room for spending car. Anyway, it is not up to the automotive industry to compensate for the extreme price increases in the housing market. Furthermore, the tax climate influences how much people can spend, making this part a bit too far for this story.
Strong increase
More interesting in this context is another factor to consider and that is the trim level of cars over the years. Things like air conditioning, electric windows, ABS, airbags and power steering are commonplace even on the cheapest models today, but not so long ago you only found them in top-class cars. In ‘normal’ cars they were often only available as an option or not at all.
But first, let’s look at the hard, unfiltered numbers. According to the annual statistics of industry associations Bovag and RAI, the average new car sold last year cost € 37,053. Ten years earlier, this was still € 24,096. In 2000 we paid an average of € 19,367 for our new car and in 1990 it was only € 14,240. Unedited, those figures already show significant price increases, but then we don’t take into account the fact that they are averages. Over the years there have been shifts, with the emphasis increasingly on lower segments. To illustrate this somewhat, we have always analyzed the top twenty models for 2020, 2010, 2000 and 1990. In 1990 it had 8 models in the C-segment (together accounted for 28 percent market share) and 5 models in the D-segment (13 percent). Ten years later, 7 models were C (22 percent) and 6 in D (10 percent). In 2010, there was no longer a single D-segment car in the top twenty and only 5 in the C-segment, against a huge increase in B and A segments. In short: the average car was not only much cheaper in the past, but was also much higher in the segment hierarchy.
Grown
On the other hand, the segments have grown in a literal sense. Put a Golf of the past next to a Polo of today and you will see that you are not far off when you conclude that the B-segment of today is the C-segment of that time.
We take the Opel Corsa as an example and always go for the five-door in its most modest version. Today the 1.2 costs € 16,900, in 2010 you paid € 14,295 for a 1.2 Selection, in 2000 € 11,115 for a 1.0i 12V Eco and in 1990 you drove for € 9,395 in a genuine Opel Corsa 1.4i Swing. A price difference of € 7,505, at the time enough for a second car. So one for the price of two? Well, for that more than seven grand you get (apart from the aforementioned inflation correction) central door locking, keyless entry and start, power steering, cruise control, lane assistance, hill start aid, automatic braking, fatigue sensor, traffic sign recognition, audio steering wheel control, on-board computer, Bluetooth, electrically adjustable and heated exterior mirrors, light sensor, 12 year warranty, ABS, traction control and airbags. Moreover, the quality of materials and workmanship are many times better. When you add all that together and take it as an option (if it existed at all at the time) with that Corsa from 1990, then the price gap is not nearly as gaping anymore.
Former enemy
That is all good, but perhaps all that now so normal luxury for you should not have been so necessary, you pay for it willingly and thanks anyway. Suppose you want to drive a new car as cheaply as possible, what does it cost now and what did it cost in the past? As we saw in the aforementioned overview in Techzle 14, the cheapest full-fledged passenger car at the moment is the Peugeot 108 available from € 12,645. In 2010 you got the keys to a brand new car for just over half that amount, because the Chevrolet Matiz 0.8 Pure cost € 7,111. Ten years before that, you could already become the first owner of a car for € 5,738, because that cost the Fiat Panda 900 Young in the first year of the new millennium.
Those who no longer harbored a grudge against the former enemy so shortly after the fall of the Soviet Union could become the proud owner of a Lada 2105 1.2 in 1990 for € 4,762. In contrast to the later entry-level cars, that was also a fairly spacious, four-door sedan.