Categories: News

Are new cars becoming luxury products?

For several months, manufacturers have no longer bothered with the words “from” in their advertisements for their new cars. A change in communication aimed at promoting LOA/LLD formulas, but also at hiding a real surge in prices.

In the world before, the one where the pandemic had not yet struck, buying a new car for 10,000 euros remained within the realm of possibility. Almost all general brands then offered “low price” vehicles and at much more affordable prices.

An era that seems to be over when reading the latest manufacturers’ catalogs, and as we report to you every week in Auto Plus magazine. From now on, the minimum most often exceeds 15,000 euros. That is, inflation that could exceed 50% in just over three years.

City dwellers on the front line

At the end of 2019, the supply of city cars (even mini city cars) was abundant: Citroën C1, Ford Ka+, Peugeot 108, Suzuki Celerio… Around ten models were battling in this segment.

Today, only Korean brands (Hyundai i10 and Kia Picanto) as well as Fiat still seem to believe in this niche. The others have deserted it (Citroën, Ford, Peugeot and Suzuki), or are no longer present there except with an aging model which will not be replaced (Renault Twingo, etc.).

Several manufacturers have moved their most affordable vehicle upmarket. Thus, at Alfa Romeo, the Giulietta compact sedan has given way to the Tonale SUV. The crossover craze has led to similar consequences elsewhere. At Suzuki, the Celerio was replaced by the Ignis, while the Toyota Aygo became Aygo X and the DS 3 became DS 3 Crossback (renamed DS 3 since this year).

Entry-level finishes are gone

The race for equipment, to which customers have succumbed, has, for its part, taken over the less equipped versions, and therefore the cheapest. Who today would buy a new car without electric windows, air conditioning, or even a touch screen multimedia system?

Thus, the Opel Corsa and the Volkswagen Up! have drawn a line under their basic finishes. From now on, these two Germans offer no less than the Edition and Active versions, which notably offer air conditioning and alloy wheels. When the appeal versions still exist, their prices have often soared.

This is particularly the case for the Peugeot 208 1.2 liter PureTech 75 hp Like, which was worth 14,880 euros at the end of 2019, compared to 17,860 euros today (+ 20%). That’s a lot, even if, in the process, it gained some standard equipment, including air conditioning.

If brands are gradually stripping their ranges of the versions with the cheapest equipment, it is not only because a significant part of the customer base wants “all-inclusive” cars.

Profitability more than volumes

It is also (and above all?) because at a time when most technological options automatically equip all production, without necessarily being activated, these entry-level products no longer bring in enough.

It is no longer a question of producing cars at all costs. The rise in the price of raw materials and the difficulties in obtaining certain components have forced manufacturers to review their way of assembling. From now on, we must produce less, but better. In other words, we need to be more profitable. This is evidenced by the staggering profits reaped by automobile groups while the production of most of them is still below what it was before the pandemic.

Between December 2019 and February 2023, according to the figures that we regularly publish in the magazine, the entry ticket for the 20 brands increased on average by 29% ! Over the same period, inflation in France was less than 9%. Suffice it to say that a new car is now an unaffordable luxury for an ever-increasing number of customers.

Read also :
Chinese electric cars: the radical method found by Europe to prevent the “invasion”
Europe wants to put obstacles in the way of Chinese electric cars
According to Volkswagen, China is “two to three years ahead” in terms of electric cars

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