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June 30th 2022 info

Are cars more expensive now? A recent study has found that over the last three years, prices for some of Britain's most popular new cars have risen by more than a quarter.

 The new Vauxhall Astra's beginning price is now 26% higher than it was three years ago, while the entry-level Nissan Qashqai's price has increased by 25%.

 So, why exactly are new cars more expensive now? Below we’ll compare car prices from 2019 to 2022 to see the differences and look into why the prices are increasing.

Price rises for 10 of Britain's best-selling cars

Below we can see just how much some of Britain’s best-selling cars have increased in the last few years.

  •  Vauxhall Astra – increased from £18,895 in 2019 to £23,805 in 2022 with a 26% increase.
  • Nissan Qashqai – increased from £19,595 in 2019 to £24,555 in 2022 with a 25% increase.
  • Ford Fiesta – increased from £17,415 in 2019 to £20,770 in 2022 with a 19% increase.
  • Fiat 500 – increased from £12,010 in 2019 to £14,235 in 2022 with a 19% increase.
  • Kia Sportage – increased from £22,770 in 2019 to £26,745 in 2022 with a 17% increase.
  • Toyota Yaris – increased from £18,190 to £20,820 in 2022 with a 14% increase.
  • Ford Focus – increased from £22,145 in 2019 to £25,045 in 2022 with a 13% increase.
  • Vauxhall Corsa – increased from £15,550 in 2019 to £17,380 in 2022 with a 12% increase.
  • Peugeot 2008 – increased from £20,150 in 2019 to £22,300 in 2022 with a 11% increase.
  • Volkswagen Golf – increased from £22,135 in 2019 to £24,430 in 2022 with a 10% increase.

Why are new car prices increasing?

Recently, there has been a global shortage of new cars being built. This is due to the COVID-19 pandemic which swept the globe in recent times. Therefore, there is more demand than supply, which results in higher new car prices.

The COVID-19 epidemic drove manufacturers to temporarily close their factories, meaning that there has been a massive shortage of microchips. These chips, also known as semiconductor chips, became scarce in the start of 2020. This means that a large majority of firms have had to decrease or sometimes suspend their production lines.

How much further will new car prices rise?

There are several major factors that unfortunately point towards further increases.

  •  Supply chains are still insecure. The Russian invasion of Ukraine has brought to light some OEM supply-chain concerns in the areas of neon (essential for production of semiconductors) and model-specific wire harnesses. Many of them are assembled by Ukrainian businesses.
  • In the future, demand for cars could surpass supply. There may be a drop in demand compared to pre-war levels, but the pent-up demand that has been accumulating for the previous two years will more than make up for it.
  • Research suggests that prices for raw materials, energy, production, and logistics have all increased significantly, resulting in higher prices.

Are used car prices rising?

Unfortunately, the problems with new car production have also resulted in the increased price of used cars. Due to new cars being increasingly unavailable, drivers are now looking to purchase used cars instead, as a last resort.

Yes, used car prices are rising, but buying used still offers much more value in comparison to the increased costs of new car production.

Will car prices go down?

No one can say for sure when the semiconductor chip shortfall will be over. Volkswagen believe that the shortage of semiconductors will carry on through the first half of 2022, but that the situation should hopefully ease in the latter half of the year.

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