If you're thinking about buy a new car This is the best time, because in just a few months prices will rise considerably. In this article we are going to analyze what is the main reason why in 2025 cars will become more expensive in Spain and throughout the European Union and what repercussions it will have.
Precisely the EU is largely to blame. And it is that the anti-pollution regulations They once again make things increasingly complicated for the different car manufacturers. In any case, a small positive part can be extracted, and that is that in the coming weeks we will see important discounts by some brands.
From 2000 to 2020 we experienced very good prices
As many of you know, car prices have risen quite a bit in recent times. Even so, I want us to go back several years, and approximately between 2000 and 2020 they have been very stabilized, rising very little and very progressively.
In fact, in those two decades, if we take into account the evolution in safety, comfort, technology and features, we could say that they did not become more expensive at all, but rather the opposite; although in recent times some anti-pollution systems such as the DPF (anti-particulate filter) or AdBlue for diesel have been raising rates.
The case is In the years 2018, 2019 and 2020 we saw really good car prices, especially in mid-ranges and with gasoline engines. In the following two years the rise in prices was really strong and today we have not recovered those values again; nor do I think it will ever be achieved.
Since 2021, cars have risen a lot in price
Using my own records, in mid-2020 you could buy a 1.500 HP gasoline Passat 150 for just over 31.000 euros. Currently, with that money you can aspire to a Volkswagen Polo with a 1.0 three-cylinder engine, 115 HP and, yes, DSG transmission.
To give another example, the cheapest Toyota Yaris hybrid cost 18.600 euros. A few months ago it was updated a little in terms of equipment and safety as standard, but it costs 22.400, that is, practically 4.000 euros more in four years.
This strong price increase that we have seen in the last four years is due to several reasons, and we are going to review it quickly before going to what is coming to us in just a few months, from January 1, 2025.
Let us remember that in 2021, extending until practically all of 2023, we suffered what is known as microchip crisis. Now we don't talk about it anymore, by the way. The supply of semiconductors was much lower than the demand, so that manufacturers of practically any product with electronic components saw their businesses affected. The result? The lower the supply and the higher the demand, the higher the prices.
It is also true that, by regulations, cars are now forced to bring many more active safety systems and driving assistants as standard, which logically increases their price.
You will have been able to see that the cars have risen a lot, but also a camera or a computer.
Something that is even outrageous is that it is increasingly difficult for citizens to buy a new car; but then most brands boast of improving their economic benefits even selling considerably fewer cars. That is, they get much more profitability than before for each unit sold, or so they say.
What will happen from January 1, 2025?
As you know, The European Union has been making adjustments and changing regulations for decades so that cars - and in general all transport - are less polluting. In fact, that is why in many models we go from the carburetor to mechanical injection, from there to electronic injection, catalysts, EGR valves, anti-particulate filters and a long etcetera.
Adjustments and changes have been made, but not as drastic as until now, being visible that it is really difficult for car manufacturers to lower the polluting emissions of their cars with thermal engines. And it's going to get more complicated in just a few months. Hence prices are going to skyrocket much more.
Each extra gram of CO2 represents 95 euros for the number of units sold
The European regulation, within what is known as CAFE Regulations, established that manufacturers had to reduce CO15 emissions by 2% compared to the 2021 average. The result was that The limit from 2025 is 94 g/km of CO2. If this limit is exceeded, they will be sanctioned with 95 euros fine for each gram and unit sold.
To give an example, if a manufacturer sells 100.000 cars in Europe and among all its sales it registers an average of 1 gram higher than stipulated, it will have to pay 9,5 million euros in fines. Many manufacturers exceed one million units in Europe and most of them also have much higher average emissions.
A couple of examples of simple and well-sold cars
We can put it a little more into detail at the level of each unit sold. If we choose one of the best-selling cars in Spain, such as the Hyundai Tucson, we see that the Asian brand's SUV in its cheapest version homologates emissions of 154 g/km of CO2. Another example? He Seat Arona cheapest there is currently, with a 1.0 three-cylinder engine and only 115 HP, homologates 121 g/km of CO2.
Doing a quick calculation we see that The Tucson would penalize Hyundai with 5.600 euros for each unit sold in that particular mechanical version, just as Arona would do it with 2.500 euros. Logically, they will have to recover it somehow; And they have a difficult time with sales of cars with low emissions.
Especially in Spain, where the sum of registrations of electric and plug-in hybrid cars is around 10% of the total
The three most important “routes” that manufacturers are going to take
Reduce your less profitable range
That said, brands have three main routes, and they are the ones they are going to use. The first is eliminate vehicles with lower margins they report, which are combustion sports cars and also smaller and cheaper models. These are the ones that would become most expensive percentage wise. Some manufacturers will maintain them, but raising rates.
It is no coincidence that every time we see fewer models from segments A and B, like the Ford Ka or Ford Fiesta, to name just a couple of the historic ones that have left the market. And having to raise the price by 2.000 euros on a 15.000 car is not the same as having to raise the price by 3.000 on a 40.000 car.
Raise prices
The second letter is, of course, raise car prices so as not to be the ones who pay the European Union sanctions. Logically, Those fines will be paid by the clients., in one way or another.
And although the world of automobiles is a passion for many of us, we must never forget that it is a business. Speaking clearly: companies are there to make money, not to lose it. It is the final consumer who will face these sanctions.
Sell more electric cars and plug-in hybrids
The third is sell many more vehicles with zero or low CO2 emissions, that is, electric and plug-in hybrids. This would mean moving a good part of sales from thermal cars to plug-in cars.
But of course, let's not forget that They are still a minority and, furthermore, that as soon as aid and subsidies are withdrawn, their sales suffer a significant slowdown, as we have seen in Germany recently.
In fact, manufacturers are going to put a lot of pressure on their subsidiaries in countries like Spain, where the penetration of plug-in cars is minimal, as they are going to be significantly hindered.
The second-hand market will also increase in price
The issue will not only affect new vehicles. Whenever there is a shortage or a new product increases in price, so does the second-hand market. What's more, we have been noticing a notable increase in the cost of used cars. The VO (used vehicle) always takes a little longer to become more expensive than the VN (new vehicle), but it ends up doing so.
So if your intention is to change cars soon, don't wait too long. Whether new or second-hand. Do it before it gets too complicated, because don't think that there will be much kilometer 0 of end-of-year self-registrations from dealers, since in these times there is not as much stock as before the pandemic.
Yes, We expect that in the last months and weeks of 2024 there will be significant discounts on new cars, because brands have to get rid of them.
Botton line
To summarize and in case there is still any doubt, all this twist of the screw of the European Union will bring with it the reduction of the range in small cars, the almost total disappearance of thermal sports versions at a relatively affordable price, the cheap cars being noticeably more more expensive than now and, of course, the number of passenger car sales will reduce.
The latter in turn will have an impact on greater aging of the vehicle fleet, which in Spain by the way already exceeds 14 years on average. Likewise, it will not exactly be a help for dealers or even the industry, which in our country has a very important weight.
Images – Current Motor News