Are new cars more expensive now?

[Burba]

I'm sure this has been discussed before, but I'm sensing that new cars are becoming more expensive these days?

I would have thought with all the advancement in technology and investment in technology and manufacturing, the cost of production would go down?

Or are we seeing a hike due to new technologies such as hybrid power, than isnt the default option yet?

[ModernAndy]

Use the second calculator down the page (lump sum) on this: http://www.thisismoney.co.uk/money/bills/article-1...

I was actually at a dealer today and noticed a Skoda Yeti on the forecourt at a bit of £25k and thought that's a bit much, isn't it? but in 2004 that £25k would be about £18k which is what you'd expect to pay for a decent spec non-premium car then.

I'd also say that there's not much hope of prices getting driven down by any significant amount, car companies would rather sell cars at higher prices than sell greater volume by lowering price as the market is fairly saturated.

[MitchT]

I remember a few years after starting my working life specific cars looked to be priced about right relative to my wage. Now when I look at the prices relative to my wage I'm gobsmacked. Maybe it's just a conspicuous lack of wage inflation on my part, but yes, new cars look shockingly expensive these days. Certainly the prices don't compute as being right for what you get anymore.

[ModernAndy]

MitchT said:

I remember a few years after starting my working life specific cars looked to be priced about right relative to my wage. Now when I look at the prices relative to my wage I'm gobsmacked. Maybe it's just a conspicuous lack of wage inflation on my part, but yes, new cars look shockingly expensive these days. Certainly the prices don't compute as being right for what you get anymore.

I'd imagine that a lot of that has to do with the car being such a large purchase. £15k to 20k on a car is the same as 60p to 80p on a Mars Bar and while few people are bothered about a small percentage hike in their shopping every year, when you go to buy/lease/finance a car every few years you're in for a shock.

[P-Jay]

Yes, in real terms they're more expensive - they've largely gone up with inflation, when for the last 5 years incomes haven't.

I have to admit I was in a VW dealer the other day and some of the prices on normal run of the mill Golf's made me think there has been some mistake at their printers or something.

[okie592]

Only slighty, but they have more kit, more efficient engines, more sound proofing etc which adds to costs, plus the cost of building a car hadn't stayed the same, you can't expect the manhufacturer to soak up the cost of the rise in oil, metals, transport, even stuff like paint is more expensive now it can't have certain chemicals In.

Cows for the leather are Probley dearer now too. Everything in the world has gone up in price, a stamp doesn't cost a therpney bit anymore does it?

[boyse7en]

just as an example, Average pay in 1990 was £13,760, when a Ford Sierra 2.0EFi Ghia 5 door cost £15,260 (ie 111% of average salary)

in 2014 average pay is £26,500, and a 5 door Focus Titanium 1.6 (probably closer than the Mondeo is to the Sierra in terms of size) is £20745 (79% of average wages)
a Mondeo 2.0 DCi Titanium is £24,095 (92% average wage)

So actually, cars are considerably cheaper than they were 25 years ago (based on a limited sample)

[Dr Interceptor]

My Jensen Interceptor Convertible cost a whisker under ten grand back in 1974. That translates into around £105k in today's money.

A Bentley V8 GT Convertible would be a comparable car now, which would cost you around £130k. Given the amount of extra kit you get with the new Bentley, and the quality of the finished product, I don't think that's over the top.

[MitchT]

ModernAndy said:

I'd imagine that a lot of that has to do with the car being such a large purchase. £15k to 20k on a car is the same as 60p to 80p on a Mars Bar and while few people are bothered about a small percentage hike in their shopping every year, when you go to buy/lease/finance a car every few years you're in for a shock.

It's about perception too though. Back when a new Golf GTi was £16k I actually perceived it as a £16k car. Now they're pushing £30k but I don't perceive them as a £30k car. £20k maybe, but not £30k - that just doesn't compute in my mind. As I said though, the conspicuous lack of wage inflation I've experienced may be behind that – The value of a pound has not diminished in my mind as rapidly as it has in the minds of others so something someone else thinks is worth £30k isn't worth that much to me because I'd have to work for so much longer than them to get it. Equally, I'd have to work a whole lot longer to get a new car for £30k these days than I would have had to to get the same car new ten years ago, so it appears to be poorer value when valued against the quantity of life I'd have to sacrifice to get it.

[Otispunkmeyer]

Isnt the new Fiesta ST about the same as what you could get the old Focus ST for when that was new?

And on that note...second hand prices for Orange ST's with the face lift seem very strong!

[kambites]

I'm pretty sure car prices are going down in real terms if you take any sort of "like for like" comparison and have been doing so pretty much continuously since the first cars appeared on the market.

People tend to hugely underestimate how much inflation actually is.

[The Moose]

MitchT said:

ModernAndy said:

I'd imagine that a lot of that has to do with the car being such a large purchase. £15k to 20k on a car is the same as 60p to 80p on a Mars Bar and while few people are bothered about a small percentage hike in their shopping every year, when you go to buy/lease/finance a car every few years you're in for a shock.

It's about perception too though. Back when a new Golf GTi was £16k I actually perceived it as a £16k car. Now they're pushing £30k but I don't perceive them as a £30k car. £20k maybe, but not £30k - that just doesn't compute in my mind. As I said though, the conspicuous lack of wage inflation I've experienced may be behind that – The value of a pound has not diminished in my mind as rapidly as it has in the minds of others so something someone else thinks is worth £30k isn't worth that much to me because I'd have to work for so much longer than them to get it. Equally, I'd have to work a whole lot longer to get a new car for £30k these days than I would have had to to get the same car new ten years ago, so it appears to be poorer value when valued against the quantity of life I'd have to sacrifice to get it.

But that surely means you're getting (relatively) poorer as opposed to this stuff getting more expensive? The same may also be happening, but I don't think you can just say that because it'd take you longer now to earn a Golf than it would back in the day...

Remember that whilst a Golf shares the same name, one would consider the Polo a fair comparison. That's not taken into account either

[chris watton]

I think the problem for a lot of people is the fact that wages are not rising, yet prices on goods/bills are - or not rising at the same rate.

[The Moose]

Also that on one day you can buy the older car for the previous price and then the new one is released and there's a price jump due to inflation all round

[DJP]

I think that they're about the same.

My old V70 was £24k new in 2000 - equivalent to about £36k now. Which is pretty much what you'd expect to pay for an equivalent V70 today.

Likewise, my previous Saab was £18k in 1994 - equivalent to about £32k now and pretty much what you'd pay for a premium hatchback like a Golf or an A3.

Although, for some reason, £30k for a Golf feels very expensive - which is odd because in 1994 I probably only earned about £18k per year, whereas now I earn considerably more than the £30k that the equivalent Golf or A3 would cost...

Yeah, it's perception.

[anonymous-user]

P-Jay said:

Yes, in real terms they're more expensive - they've largely gone up with inflation, when for the last 5 years incomes haven't.

This is it exactly, and as others have said the price of some things (food in particular) has increased by a greater rate than the general rate of inflation, but as these are smaller amounts it doesn't tend to stand out quite so much.

Complaining about how expensive things are these days is also a part of the ageing process I think, as is going on about how so and so looks to young to be a doctor/policeman/whatever

[ORD]

I think the simple answer is this - cars have got a bit cheaper over time, but everything else has got cheaper more quickly, making cars look expensive compared to other things. We are all ruddy spoilt with cheap consumer goods.

[ModernAndy]

Another thought: I think you can get a new car relatively as cheaply as ever before. I mean six grand nowadays is nothing, even for a Dacia that is essentially a rehashed Renault. I'm not going to go to the trouble of working out how much of the average income that is and whether as a percentage that's historically low or not but it can't be far away from the £4,000 car of the 90's or the £2,000 car of the 80's (if you do want a new car with no kit whatsoever- as some do)

[thinkofaname]

Dr Interceptor said:

My Jensen Interceptor Convertible cost a whisker under ten grand back in 1974. That translates into around £105k in today's money.

A Bentley V8 GT Convertible would be a comparable car now, which would cost you around £130k. Given the amount of extra kit you get with the new Bentley, and the quality of the finished product, I don't think that's over the top.

Yep. Economists use the term "hedonic" when they try to factor in these improvements in the quality of products, when trying to determine things like the true rate of inflation. The upshot is that things like cars generally tend to get cheaper, like for like and earnings-power adjusted.
A 1974 Jensen wouldn't have had sat nav, Bluetooth, etc. If you look at those luxury cars of the past they can be quite spartan compared to even humble cars of today.

Edited by thinkofaname on Tuesday 7th October 15:18

Edited by thinkofaname on Tuesday 7th October 15:19

[ging84]

For me the only meaningful comparison you can make is comparing the cheapest car you could buy at the time with the current cheapest you can buy.

currently the cheapest car is £5995
according to that inflation calculator
in 2000 £5995 was about
£3,959.97
in my memory around that time the cheapest cars were about £4500

in 1983 £5995 was
£1,944.16
found a lada riva (which i am told was the cheapest car at the time) advert from 1983 which says it was £2895

Considering that vat is 20%, it was 17.5% in 2000 and 15% in 1983, there is a clear downward trend in the cost to buy a car, although that might not represent what people actually spend.