Cars are becoming more and more expensive and it is not clear why

Buying a new car in Italy is increasingly expensive. We spent 46 billion in 2023, +22.3% compared to 2022. On average, it costs almost 29 thousand euros today, compared to 21 thousand euros in 2019 (Fleet&Mobility Study Center). An increase of 37% in four years. Buying a new car is almost unattainable and the trend of increasing prices has continued for years. “But in the coming months we expect the situation to return to normal, with increases in line with inflation and no longer with the anomalous leaps we have seen since 2019”, reassures Pier Luigi Del Viscovo, director of the Fleet&Mobility Study Center.

In 2023, 1,590,610 cars were registered for a total cost of almost 46 billion. The same amount paid in 2007, however, for 2.5 million vehicles registered. In seventeen years, the average price, therefore, went from 18 thousand euros to almost 29 thousand euros. Before Covid, the average cost was around 21 thousand euros. Today, 8 thousand euros more are spent than pre-pandemic (+8.3%).
Cars are increasingly expensive and therefore increasingly a luxury good. Galloping inflation has certainly played a fundamental role in influencing the price lists. “We have also experienced a period of shortage of components for production. In addition to microchips, cables, produced largely in Ukraine, were also in short supply. This phase should now be over, also because the volumes, which are growing, are still far from the 2 million cars that are the minimum level for the sector (in 2019 we were at 1 million 916 thousand)”, explains Gian Primo Quagliano, president of the Promotor Study Centre.

The unprecedented price boom has also been dictated by the growing technologicalization of cars. Advanced driver assistance systems (ADAS) and new safety and environmental technologies mean an increase in production costs. ”Over the past decade, the transition of customers towards SUVs has also played an important role in the increase in prices. Being more fashionable and also richer in accessories and features, customers were willing to pay more for them. Now this factor is more contained, but the weight of inflation remains, which is falling and not at dramatic levels, but is certainly no longer the creeping one of the past. And the obligation of manufacturers to register a mix of electric and traditional cars also weighs. Having to make margins and not being able to sell all the cars that customers ask for, it is less necessary to force prices”, explains Pier Luigi Del Viscovo, director of the Fleet & Mobility Study Center. Electric vehicles, which cost about 25% more, have impacted price lists.

The end of the production bottleneck should also slow down the price hike. “In 2020-2021, manufacturers found themselves with more customers than the cars they were able to produce (due to a shortage of material and delays in production) and so all discounts and zero kilometers were canceled. Customers waited for cars ordered 18 months in advance. Obviously, prices went up,” continues the director of the Fleet & Mobility Study Center. Now discounts and zero kilometers are returning and the effects on prices are partly noticeable, but still too little.

All this while the market is growing. In June there was a +15% compared to 2023, looking at the first half of the year the increase is 5.3% on the previous year. The good result is mainly due to electric cars, driven by incentives. While the constant increase in the “used” sector (+9.3 first half of 2024 on 2023) is explained by the boom in the prices of new cars. But so much demand for used cars has also caused the costs of this segment of the market to rise (+4.1% in 2023).

It is becoming increasingly expensive to buy a new car, but there are signs of optimism for the coming months for Italian families.Private individuals account for 52% of the market compared to 55% in volume. “The Italian fleet counts 40 million and 800 thousand cars in circulation on a population of less than 60 million and with 21 million families (without considering that there are many families composed of a single elderly person). We can say that there are about two cars per family in Italy”, concludes Gian Primo Quagliano president of Centro studi Promotor. A luxury, if prices do not stop.