how do price increases affect sales in France?

Are you worried about price increases in the automotive sector? Wondering how inflation actually affects car sales in France? We help you understand market issues.

The impact of inflation on the prices of new vehicles

Inflation has a significant effect on new car prices. In 2023, increased production and labor costs, as well as shortages of electronic components, have led to widespread price increases in the automotive sector. In France, the average price of new vehicles has increased by more than 10% in one year, an inflation which has direct consequences on consumers’ purchasing decisions.

Automakers are passing on some of the costs to customers, leading some consumers to postpone their purchase or turn to used vehicles. Electric models, often more expensive to produce due to the complexity of their batteries, are particularly affected by this increase. This has caused a decline in sales of new electric cars, despite government subsidies.

The increase in prices of used vehicles

Used cars are not immune to inflation. With sales of new vehicles dwindling, demand for used cars has exploded, driving prices higher in that market as well. In 2023, some popular used models saw significant price increases.

This situation is due to several factors. First, the shortage of new vehicles pushed buyers to the used market, which intensified demand. Second, modern used cars, equipped with advanced technologies, have become an attractive alternative to new vehicles because they often offer similar performance at a lower price. However, with inflation, these used cars are now sold at much higher rates than a few years ago.

Consumer response: towards a postponement of purchases?

Faced with this general increase in prices, many consumers prefer to delay their car purchase, hoping for a stabilization of the market or a drop in prices in the short term. This trend is evident for both new and used vehicles. However, this strategy carries risks, as prices could continue to rise, and the availability of sought-after models could reduce.

Buyers who cannot postpone their purchase are exploring other solutions. Some choose to finance their vehicle through leasing or car loans, in order to spread the cost over several years. Another possible option is to turn to the online dealership BYmyCAR, which offers greater price transparency and more flexible options. This type of platform allows consumers to quickly compare several models and access exclusive offers on new and used vehicles.

The role of manufacturers and dealers in managing inflation

Automakers and dealers play a major role in managing this situation. To try to maintain stable sales, some manufacturers offer attractive financing offers, reductions or leasing options with lower monthly payments. Government promotions and incentives on electric vehicles, although limited by inflation, remain a lever to support sales in this segment.

Online dealers are also adapting to this new reality by diversifying their offering. Thanks to their large stock of used vehicles, they allow customers to find models at competitive prices, despite widespread increases. Buying online often offers advantageous conditions, with reduced costs and the possibility of comparing several models without leaving home.

Solutions to counter the impact of inflation

Despite price increases, there are strategies for consumers looking to purchase a car during this time of inflation.

Here are some tips for finding a vehicle at the best price:

• Compare offers: it is important to take the time to compare offers between different dealers. Using online platforms allows you to get an overview of the market and spot the best deals.

• Favor recent used cars: recent used vehicles, well maintained and equipped with the latest technology, offer an excellent compromise between price and performance.

• Opt for leasing: leasing is an advantageous solution for those who wish to drive a new or used vehicle without paying the full price immediately. It allows the cost to be spread over several months, thus reducing the immediate impact of inflation.

• Buy at strategic times: Automotive sales experience peaks and valleys throughout the year. Buying a vehicle at the end of the quarter or during special promotions can allow you to benefit from attractive discounts.

• Consider hybrid or electric vehicles: Although prices for electric vehicles have increased, they remain an attractive long-term option thanks to fuel savings and certain tax incentives. These cars are becoming more and more common on the second-hand market.

What are the prospects for the French automobile market?

Current inflation could well continue to affect the French automobile market in the months to come. Several factors can contribute to stabilizing the situation. On the one hand, increasing production rates, particularly for electric vehicles, could ease supply tensions and lead to a gradual decline in prices. On the other hand, technological innovations, particularly in the field of batteries, could reduce the production costs of electric and hybrid cars.

Automakers are also under pressure to adapt to a transforming market, where consumer expectations are changing rapidly. They will have to continue to offer innovative solutions, both in terms of products and services, to attract customers who are increasingly attentive to the question of price.

Inflation has had a major impact on the French automobile market, both for new vehicles and used cars. With appropriate strategies and exploring solutions like online dealerships, buyers can still find vehicles at reasonable prices, while benefiting from favorable warranties and financing options.