PRICE OF PROGRESS
New-car bargains have all but disappeared as brands look to cover rising costs
Remember when you could buy a small car for $19,990? A decade ago it was commonplace and until a couple of years ago you could find one if you shopped around. Fast forward to 2022 and you could be paying 50 per cent more for a small auto hatchback. The popular Mazda3 and Toyota Corolla start at about $31,000 and $29,000 drive-away respectively.
Even Kia, which regularly had sub-$20,000 drive-away deals, has given in. The most affordable Cerato is now $27,490.
Price rises have accelerated over the past two years. All of the top selling brands and major luxury players have hiked prices, many across all or most of their cars.
Last week Audi increased prices across its line-up, building on incremental increases in recent years. The rises are for cars produced in 2022 (due within weeks) and make some – including the popular Q5 SUV – 10 per cent more expensive than they were two years ago.
Audi blames the increases on “rising material costs and continued supply challenges”.
It’s not alone. The new Mercedes-benz C300 is 24 per cent more expensive than the car bearing the same badge two years ago – and prices are now fixed. Granted it’s a new model but there was a time when extra features and added flair arrived with little or no price rises.
The BMW X3 xdrive 30i is 18 per cent more expensive than it was early in 2020, although the previously optional M Sport pack is now standard. That’s a common theme: car makers are deleting cheaper variants or adding equipment and raising the price.
The Honda Civic is the most dramatic example: the single model in the range now costs an eye-watering $47,200 drive-away. In 2020, you could buy a Civic hatch for $22,790 plus on-roads.
The most affordable version of the Volkswagen Golf is approaching $40,000 because the entry-level car isn’t available due to stock shortages. Volkswagen’s cheapest Tiguan is now a better equipped Life variant, adding 21 per cent to the price.
The Skoda Kamiq small SUV, which scooped our 2020 Car of the Year award thanks to its tempting $29,990 price tag, is now $35,990.
Volkswagen Australia spokesman Paul Pottinger says that while raw materials are having an impact on prices, shipping costs are more significant. “The great majority of our cars still come from Europe.”
MG says it costs about four times more to put a car on a ship from China than it did early last year. As a result, when MG’S 2022-build cars arrive some will be up to 5.5 per cent more expensive. The cheapest MG3 will be $18,990 drive-away compared to $15,990 with $1000 cash back in 2019. That represents an increase of 27 per cent against a backdrop of a 3.9 per cent increase in average weekly earnings from November 2019 to May 2021 (the most recent Bureau of Statistics figures).
Even top-seller Toyota is asking more – and people are paying, such is the global shortage of stock that has eliminated much of the discounting in the industry.
The price of the popular RAV4 has increased between 4 and 7 per cent in two years but buyers are still queuing to own them.
Ute prices, too, have crept up, from the Toyota Hilux to the Isuzu D-max.
Mazda Australia managing director Vinesh Bhindi blames labour costs, raw materials and freight challenges. “It’s no longer about price, it’s about getting space on ships,” says Bhindi, who also points to the influx of electrified vehicles as something pressuring prices. “There is new technology, electrification coming into motor cars, which was always going to be a price-up scenario.”
EVS haven’t been immune; the Volvo XC40 Pure Electric is now more expensive, as is the Porsche Taycan.
The Tesla Model 3 is a rarity. Its price has come down by almost 21 per cent since its 2021 highs. A shift in production to China and the use of cheaper raw materials has cushioned the blow for the brand.
The price cut helped it become the top selling prestige car last year.
While some in the industry are forecasting more price rises, EVS could be an exception.
“I think there will be a bit of downward pressure because I think there’ll be a lot of manufacturers coming into play in Australia with EVS,” says Kia Australia chief operating officer Damien Meredith.