Car pricing - things going mental or is it just me?

[T1berious]

Morning all,

So I'm mentally preparing myself to replace a car next year, I guess a few years back things didn't "seem" so bad pricing wise and I felt for a few years that some brands were properly knocking on the door of the next tier price wise (BMW 8 Series being a good example).

So two recent car prices were made public (MX5 and GR Yaris) and both made me do a double take and ask "How much!?"

Inflation plays a part but are manufacturers inflating prices well above inflation because they know 99% of sales will be via some form of lease deal so they just focus on the monthly figure?

Dreading having to replace the Kia next year.

Just wouldn't mind hearing your thoughts.

[Presuming Ed]

The GR Yaris might be a great car but the sceptic in me thinks they don't actually want you to buy one, hence the price. Given the CO2 levels and the mix of electric the manufacturers have to adhere to these exciting cars make good marketing material but really Toyota want you in the Hybrid version.

Honda are the same with the Type R. Price it so high that it isn't too popular and those you do sell at least there's margin in them.

[JAMSXR]

I work for an IT manufacturer, our cost of goods has gone up circa 30% in the last 3 years.

Depreciation is working wonders in the used EV market. 50% in a few years seems to be normal. I’ve jacked in the wife’s 5 year old X1 for a 3 year old Tesla with significantly less miles for very little uplift.

Just keep the Kia

Edited by JAMSXR on Wednesday 27th March 10:20

[jhonn]

You're not alone - the only new car I've ever bought was my MX-5 which cost circa £18k in 2018 - the same car now is £27k ish. I couldn't contemplate buying a new car now; the only other car that I'm interested in is a Jeep JL Wrangler - it's out of the question new, even 3 year old cars which you would expect to be about 50% of their original price are only dropping 30-40%.

I look at the prices of everyday premium cars knocking on for £70-90k (e.g. Defender) and wonder how folks can afford it.

So... yes, a monthly deal where the true cost is 'hidden' can seem to be attractive to some folks - not for me though. If you absolutely need a new car what are you gonna do?

[T1berious]

JAMSXR said:

I work for an IT manufacturer, our cost of goods has gone up circa 30% in the last 3 years.

Depreciation is working wonders in the used EV market. 50% in a few years seems to be normal. I’ve jacked in the wife’s 5 year old X1 for a 3 year old Tesla with significantly less miles for very little uplift.

Just keep the Kia

Yeah, I'm feeling that might be the best option but in my crazy mind I was like "its got a long warranty and its transferable" so get rid while it's got a chunk of warranty left. That way it might have some value in it.

(he says rocking quietly to himself in the padded room....)

[vaud]

You are also seeing a knock-on impact of covid. The supply chains and sales were impacted in 2020/21+ and so there are fewer used now coming available?

[ecsrobin]

Pricing has been jumping up for years. I purchased a top model Abarth around 6 years ago for £22k when I sold it 3 years ago the top model with same spec was £30k. Even an electric Astra is nearly £40k now.

[brillomaster]

no one actually buys new cars outright, so its almost immaterial what the list price is - for the first 5 or so years of a cars life, it'll be paid for with monthly payments.

once it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.

[-Lummox-]

Sad times when a middling Astra costs £40k...

In 1985 a top of the line Astra GTE mk2 would have set you back £6,999 - inflation adjusted to today's prices that's just under £30k.
An Octavia vRS in 2005 would have been around £15k new, which again is about £30k in today's money.

I know the modern versions are a lot more high tech, but at the time, either of these examples were on par with their contemporaries. It does feel a lot like manufacturers these days are trying to make "average" cars purposefully as expensive as possible, knowing that most buyers won't buy them outright anyway from new.

I also can't help but wonder when all these hybrids and EVs get to be 10+ years old, whether the new buyers are going to have to budget for replacement batteries etc at a cost of several thousand pounds. Not sure they will still look so eco if that happens.

[Terminator X]

Imho the car industry is in an extremely precarious position right now; what seems to be massive prices unaffordable to the masses then forced to build EV when the demand (in the UK) is not there. Noise Regs etc turning once great cars into almost silent machines. On it goes.

Me, I will stick with older 2nd cars from now on having once been a serial car changer.

TX.

[vaud]

-Lummox- said:

Sad times when a middling Astra costs £40k...

In 1985 a top of the line Astra GTE mk2 would have set you back £6,999 - inflation adjusted to today's prices that's just under £30k.
An Octavia vRS in 2005 would have been around £15k new, which again is about £30k in today's money.

I know the modern versions are a lot more high tech, but at the time, either of these examples were on par with their contemporaries. It does feel a lot like manufacturers these days are trying to make "average" cars purposefully as expensive as possible, knowing that most buyers won't buy them outright anyway from new. .

They are also much more reliable, many have 20k service intervals and most modern cars will do 150k+ miles if maintained so even adjusted for inflation the £/mile is much lower in terms of TCO.

If you assume the old Astra had a 60,000mile life and was bought at inflation adjusted number, and assume a new basic Golf now costs £26k and lasts 150,000miles then your cost / mile is 59% lower. Ok, crude calculation but a more modern car is more expensive but will last a lot longer and do more things.

[T1berious]

brillomaster said:

no one actually buys new cars outright, so its almost immaterial what the list price is - for the first 5 or so years of a cars life, it'll be paid for with monthly payments.

once it hits the actual secondhand market where someone might actually buy it with cold hard cash, it'll depreciate to what its actually worth when you're not in a finance deal.

Last car I had on HP was 1995, when I'd done the sums post purchase, realised I'd been mugged. Never again.

(But that's me, and I appreciate everyone's different)

[-Lummox-]

vaud said:

They are also much more reliable, many have 20k service intervals and most modern cars will do 150k+ miles if maintained so even adjusted for inflation the £/mile is much lower in terms of TCO.

If you assume the old Astra had a 60,000mile life and was bought at inflation adjusted number, and assume a new basic Golf now costs £26k and lasts 150,000miles then your cost / mile is 59% lower. Ok, crude calculation but a more modern car is more expensive but will last a lot longer and do more things.

I get the point (kind of) but suggesting 80s cars on average had a service life of 60k miles seems a bit low?

[JAMSXR]

T1berious said:

JAMSXR said:

I work for an IT manufacturer, our cost of goods has gone up circa 30% in the last 3 years.

Depreciation is working wonders in the used EV market. 50% in a few years seems to be normal. I’ve jacked in the wife’s 5 year old X1 for a 3 year old Tesla with significantly less miles for very little uplift.

Just keep the Kia

Yeah, I'm feeling that might be the best option but in my crazy mind I was like "its got a long warranty and its transferable" so get rid while it's got a chunk of warranty left. That way it might have some value in it.

(he says rocking quietly to himself in the padded room....)

That’s just man maths because you want a new car

[Saudade]

Yep, it's not just car prices though they are very strong in comparison to other goods that have risen due to inflation. Even the "boring" stuff is very expensive, e.g. Astra already mentioned.

I don't know if it is only really an issue in the UK, some prices for cars over in the USA:

FL5 Civic Type R - £50k UK and £35.5k USA
GR86 - £32k UK and £26K USA
mx5 lowest spec - £23.7K UK and £28k USA
Tesla Model 3 - £40k UK and 32k USA

Given that the USA have better wages than us as well it seems like we are truly shafted in the UK, at least when it comes to cars.

[ecsrobin]

Saudade said:

Yep, it's not just car prices though they are very strong in comparison to other goods that have risen due to inflation. Even the "boring" stuff is very expensive, e.g. Astra already mentioned.

I don't know if it is only really an issue in the UK, some prices for cars over in the USA:

FL5 Civic Type R - £50k UK and £35.5k USA
GR86 - £32k UK and £26K USA
mx5 lowest spec - £23.7K UK and £28k USA
Tesla Model 3 - £40k UK and 32k USA

Given that the USA have better wages than us as well it seems like we are truly shafted in the UK, at least when it comes to cars.

Now do that same comparison in Europe.

[vaud]

Saudade said:

Given that the USA have better wages than us as well it seems like we are truly shafted in the UK, at least when it comes to cars.

Be careful with like for like comparisons.

Don't forget sales tax which ranges from 0% to 8.25%.

The US has different wages but on the other hand they have a different tax system and most people have direct costs that we don't have in the UK (e.g. healthcare) . They also work more hours and have less holiday. UK has better employment protection, etc

[georgeyboy12345]

It’s because other countries are getting richer and the UK is getting poorer.

[Doofus]

Stealthily increasing the prices of ICE cars normalises the inflated prices of BEVs.

All of a sudden, a bit more money to get a BEV doesn't seem such a stretch.

[swamp]

The price of the new GR Yaris is probably about right... the old version was (very) underpriced:

See https://youtu.be/vFO8i9Y8thQ?t=224