If you’re in the market for a new car, you’ve probably already noticed how expensive everything is! The dramatic increase in car prices is not lost on anyone, but even the most basic models seem out of reach for many. Cheap cars have disappeared from dealerships. What happened?
In reality, not so long ago, the supply of new cars was abundant and met one essential condition: being affordable. Drivers looking for a car no frills, but functional and reliablecould find affordable options. Today, this reality has radically changed.
While there are several reasons for this trend, for me one of the main culprits isEuropean Union and its strict environmental and technological regulations which have completely transformed the automotive landscape on the Old Continent. For better and for worse.
A more sustainable but less affordable future?
I’ll start with the question of emissions, the most obvious. The European Union’s environmental policies, focused on reduction of polluting emissions and the promotion of cleaner and more sustainable transport, aim for a cleaner planet and more sustainable transport.
These regulations seem to be a positive step towards a better future, I do not deny that, but there is a direct consequence that is not always mentioned: the prices of new cars have increased significantly due to these regulations. Quite simply becausebefore it was possible to buy a car with a simple and reliable engine at a reasonable price. Today this type of vehicle has practically disappeared, because to comply with European regulations, even the most basic cars become more expensive, as they are forced to add technical complexity and technological novelties.
Performance, comfort and design: this SUV could well become your next ideal vehicle!
Under the new regulations, which provide for increasingly strict CO₂ emission limits, manufacturers have had to review the design of their internal combustion engines, adding technologies such as particle filters or systems complex electrification. In other cases, they have had to remove them altogether and switch to a 100% electric propulsion system. Vehicles are more expensive to produce and this must be reflected in the prices paid by the consumer.
Evolution of the average age of the car fleet in Spain. – Source: ANFAC Annual Report 2023: ANFAC Annual Report 2023. Data: Ideaauto
One of the most controversial mechanisms is the imposition offines for manufacturers who exceed established CO₂ emission limits. This measure implemented by the European Union aims to encourage manufacturers to develop cleaner technologies, but the reality is that, unsurprisingly, the costs of these million-dollar fines are passed directly to the consumer. Punishing manufacturers also means punishing the consumer.
At many brand events I attend, the issue of penalties comes up and brand managers make it clear that they have no choice but to sell fewer combustion models. But what they’re not going to do is lose money: usually, they increase the price of combustion models in order to compensate for the fines linked to their sale. The more expensive it is, the less it will sell, but it will still be just as profitable.
I’ll give you an example. The “low cost” car par excellence is the Dacia Sandero, which has long been the sales leader in Spain in the passenger car channel. The Sandero is one of the few models still considered relatively affordable, but it has seen its base price increase significantly, exceeding 13,000 euros in its most basic version, whereas just five years ago it could be purchased for less than 8,000 euros.
This is a considerable increase and it is not the only one. The same thing happened with other traditional low-cost models like the Fiat Panda or the KIA Picanto. Both had versions for less than 8,000 euros before emission standards were tightened and today they are both around 15,000 euros in their entry-level version. These prices have almost doubled in five years due to the need to comply with European standards on emissions, safety and technology. Besides, I warn you thatin 2025, another sharp rise in prices is expected with the tightening of fines for manufacturers.
Since the emissions issue does not affect electric cars, perhaps we might think that we will find affordable cars there. I think that the electric vehicles will not be spared either. Deadlines have been set in Europe for manufacturers to stop selling combustion engine cars and the focus is clearly on the development of electric vehicles. This transformation has a cost and also opens the door to a new competitor: China.
The massive arrival of Chinese electric models has raised hopes of new 100% electric and inexpensive cars. Once again, the EU has rushed to curb the existence of affordable cars by introducing customs duties that significantly increase the price of these vehicles. In theory, the EU wants to protect the European automobile industry, but in practice it is the buyer who suffers. Thank you Europe.
On the other hand, I find it ironic that European policies are forcing the switch to electricity as soon as possible, but at the same time prevent affordable electric cars from being brought to market, making it difficult for mass adoption of electric cars. Electricity yes, but not for everyone?
The end of cheap cars… in Europe
Other European measures will lead to the extinction of cheap cars, such as themandatory introduction of new driver assistance technologies for new cars. Mandating intelligent speed assistance, lane departure warning or the emergency braking system improves road safety and reduces the number of accidents.
Here is the Kia Sportage 2025: the future powerful urban SUV ready to revolutionize the city!
This is entirely desirable, of course, but once again the increase in the cost of producing new cars in the economy range is undeniable. In the mid and upper ranges these systems were already common, but in entry-level models this means an increase in equipment and therefore an increase in price. One thing leading to another, many families come up against an insurmountable economic barrier and no one in Brussels seems to care.
There is no point in making new cars more and more durable if a large proportion of consumers cannot afford them.
Yes, I recognize that rising car prices are not a phenomenon unique to Europe. But itis on our continent that the impact environmental and safety regulations imposed by official bodiesis most felt. If we compare the prices of the same car model in Europe, the United States and China, the differences are notable, but the result is always the same: it is in European dealerships that they are more expensive, partly because of greater regulatory pressure.
Look, a Ford Kuga or a Honda Civic costs 22,000 euros in China, 25,000 euros in the United States, but goes up to 33,000 euros in France. For example, a Toyota Corolla Cross costs 17,000 euros in China, 22,000 euros in the United States and 38,000 euros in France. Whatever the models compared, they are always more expensive in Europe.
European regulations are a double-edged sword
With regulations affecting both combustion and electric models, it seems obvious that the The direct impact of all these policies on the price of new cars has created a barrier for many drivers who simply cannot afford to buy a new car today. Cheap cars, whether electric or combustion, are disappearing from the market and that is not good news.
As a result, consumers who cannot afford a new car are pushed to buy used vehicles or to extend the life of their old cars. The figures show that the aging of the vehicle fleet is a fact and that it is progressing by leaps and bounds, with the opposite effect in terms of sustainability and safety.
European regulations have made significant progress in road safety and the adoption of electric mobility, but they have also contributed to making cars more expensive, leaving many drivers out of the equation. The market needs a solution that allows families to continue to have access to affordable new cars without compromising environmental or safety objectives. The challenge is to find a balance.
Related News :