There’s denying that new cars are more expensive than ever before. To understand why is to take a deep dive into their construction, safety regulations they need to meet, and energy laws to abide by.
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When you take in the engineering, technology, safety, and design of new models – which can run to hundreds of millions of pounds – to develop a new platform, it is quick to see why new car prices have skyrocketed. The architecture and design of new cars is enormously expensive. They build the price of warranties and service plans into the car’s retail prices.
The demand for new cars has steadily fallen for the past few years around the globe, and the novel coronavirus pandemic put another major dent into new car sales figures. In fact, it slowed the production of vehicles down, with about 60 percent reduction in manufacturing because of the interruption to their supply chains.
All that comfort, luxury and those array of convenience features come at a price. From reverse cameras, lane-keep assist technology, electric powertrains and more, raise their price. They offer a model with few standard features. The more features you’d like in your vehicle, the more you’ll need to pay. Trim lines can vary from adding metallic paint to adding touchscreens and advanced driving aids, with the price tag rising from £500 to £5000. The sales model of new cars doesn’t offer freebies to buyers: everything and anything a buyer would like added to their cars from the dealer’s brochure is possible – only when paid for by the buyer.
Often misunderstood are the implications of new car pricing and taxation. For Vehicle and Excise Duty (VED), tax payable on new cars has risen. These taxes include CO2 emission figures. Only zero-emissions, pure-electric vehicles are exempt from this tax. In fact, by 2030, the UK government has stated that we may sell no new cars after that date with ICE (Internal Combustion Engines) technology.
Of course, Britain is an Island market. Most of the cars on our roads are imported. Importation raises the costs for retailers, who then pass those costs onto buyers. There is also very little competition for new vehicle sales: dealerships and brands don’t have to compete with neighbouring markets for customers or price.
The increased cost in development and engineering of EV (Electric Vehicles) means that EVs are more expensive to buy. It costs a lot more to manufacture a car today and the next generation of vehicles built to meet future demands, regulations, and technologies require a steeper selling price.