what makes cars so expensive?

You’ve just found the car of your dreams. It’s packed full of all the features you need and it’s even readily available. Job done, right? All that’s left is the cost.

Just as you’re about to commit to the purchase, you cast over the price to check everything’s in order when, suddenly, your dreams are crushed.

Sometimes, prices are hard to predict on cars, and they can fluctuate greatly between model to model. As consumers, it’s not always apparent why prices vary this much, which can leave us feeling cheated.

Thankfully, we’re here to rid you of this situation once and for all. Join us as we run through some of the hidden contributors to car costs.

why are cars expensive?

So, what makes a luxury car so expensive? Here are some of the lesser-known factors that drive up car costs:

marketing and advertisement

How are we to know about the latest car news if there was zero marketing activity? All this promotion comes at a cost, whether it’s undertaken by an agency or handled in-house. For brand new launches especially, marketing and advertisement takes up a significant amount of costs for new car production.

While remarketing an existing car is slightly easier due to prior public knowledge, launching something completely new requires a major push on awareness. Not only must manufacturers inform outlets that the car exists, they must also generate enough excitement to get people interested. This is what inspires television advertisement, social media promotion, and training materials for salespeople.

research and development

Launching cars is essentially a gamble. While manufacturers can undertake tests to put their newest models in the best position possible, there’s never a guarantee on real-life capabilities. As such, research and development is a core component of launching any new car. Extensive research allows for intricate issues to be solved well ahead of car launches, negating the risks associated with component failure.

Of course, research and development doesn’t just include manufacturing decisions. Research could include anything from market research to solving problems experienced with predecessors.

material cost

For luxury cars, there are a wide range of materials used. Leather seats, soft touch plastics, and even natural wood materials all need to be sourced from somewhere.

Some materials naturally cost more than others. Plastics are fairly common, making them a cost-effective solution to a variety of internal parts. However, on a luxury car, buyers may be more accustomed to lavish materials like mahogany, Alcántara or carbon fibre. As material choice gets more exotic, the prices increase in tandem.

Over the last year or so, economic changes have seen material costs skyrocket – something that has been passed on via new car purchase prices.

tooling and manufacturing

For any new car launch, brands are going to do their best to keep costs low by reusing existing processes as much as possible. Afterall, redesigning a part may require a new tool to be developed. While tooling may sound relatively straight forward, having something designed that’s able to be used thousands, if not millions of times over, is another challenge entirely.

The fact is… tools break. That places manufacturers into a bit of a dilemma: do they fallback to the tools they know and trust? Or take a gamble on developing something new? Regardless, the costs of developing the necessary machinery to produce car interior, exterior and internal components at scale is enough to make your eyes water.

import costs

In a perfect world, each car would be manufactured and sold in the same place. However, for an insurmountable number of reasons, that simply isn’t feasible.

Whether it’s decreased manufacturing costs, better facilities, or regulatory grey areas, cars are very often manufactured thousands of miles away from the markets they are sold into. For example, in the UK, only Jaguar Land Rover is actively manufacturing new vehicles, while common manufacturers like Ford, Vauxhall and Renault produce vehicles in the USA, Germany and France.

To get those cars to their destinations, manufacturers must undertake major courier operations that involve sending cars inside freights. This involves many checks to be taken to ensure legal compliance, fuel expenses, and an overwhelming amount of manpower.

design

Much like research and development, manufacturers will pool a great portion of resources into ensuring that the car is aesthetically pleasing. This not only takes up a considerable amount of budget, but also accounts for a great deal of time. Countless revisions, alterations and adjustments come to fruition in the design phase, making it a critical element of the overall production process.

Design is what influences the manufacturing phase, and ultimately informs any promotional material, so it’s a pretty significant step in the whole process.

brand reputation

Ferrari, Jaguar, Bentley, Mercedes-Benz, what do these brands have in common?

Each of these brands is positioned at the higher end of the budget within the car market. This is largely due to the reputation that each brand has acquired over the years. Not only are the cars that they produce placed right up there with the very best, but the presence of their branding plays a pivotal role in how their cars are perceived.

While some cars can offer comparable performance to the cars launched by these manufacturers, choosing a Jaguar over a Vauxhall, for example, is a no-brainer to some consumers where budget is no concern, even if the costs are much higher.

rarity

Exclusivity is known to increase the demand for commodities. This reason alone is why collectible items are so popular (and pricey). The same rule applies to cars. Limited edition, hard to find models are exceptionally rare. This can drive up the prices that consumers are willing to pay, especially those found on the second-hand market.

Read more: Antique cars: which vintage models are worth the most and why?

looking for a new set of wheels? we can help

Although there are cars with high prices, there’s no need to panic if you’re on a budget. With findandfundmycar.com, you can tailor your search to suit your needs.

Browse through all the used cars we have on display from a variety of dependable, UK-based dealerships today.