New car price increases: Which models now cost more, and why?
We take a deep dive into just what's driving new car prices up across all segments, along with some handy suggestions to help you save money if you are in the market.
Prices of new vehicles in Australia have slowly started to creep up over recent months and, indeed, have risen significantly over the past handful of years to the tune of thousands of dollars.
To assess why prices in the new car market are heading in this direction and to establish how it will affect average Australians, we'll delve into what has caused these price rises so far, what global issues could cause further increases and what you can do to best mitigate these rising costs when shopping for a new car.
Which vehicles have increased in price?
These recent price increases have affected manufacturers from a variety of countries, and concern everything from individual models to even range-wide increases. Some recent examples include:
- The 2022 Jeep Compass saw a $1,400 price increase for all existing trim levels. Additionally, the new entry-level Night Eagle variant costs $2,000 more than its 2021 equivalent.
- Renault increased prices for every model it offers in Australia except for the soon-to-be updated Kangoo van. Increases range from $600 for the Koleos to $6,100 for the Mégane.
- Genesis' G80 luxury sedan saw increases of $1,100 for the 2.5T model and $2,100 for the 3.5T.
- Mitsubishi raised the price of its 2022.5 Outlander Exceed and Exceed Tourer variants by $500 and $1,000 respectively.
- The 2022 Hyundai Santa Fe saw prices rise across the range by between $850 and $1,700. However, some new features were added to justify the cost.
Be aware, though, that some manufacturers are removing features from certain models in order to maintain their existing price point, such as:
- BMW introduced new Sport variants of its 118i, 218i Gran Coupé, 320i and 330e models which feature what it calls an "optimised" specification list to lower the models' entry pricing. Normally, all BMW models in Australia come in M Sport specification as standard.
- While the price of top-spec Mitsubishi Outlanders increased, certain features were removed from ES, LS and Aspire variants to help them retain their existing price points.
- Although it was only recently announced, the all-new Mercedes-Benz C-Class will not be offered with adaptive suspension and 4-wheel steering at launch. When these features do return, they'll be part of a $3,400 options package.
What is the cause of these price rises?
If there's one overarching thing that has thrown the entire car industry into shambles, it's the ongoing semiconductor shortage. Although automotive isn't the only industry affected, the shear number of electronic components in modern cars that require semiconductors is what has made it such a pressing issue.
Although production delays are the main effect blamed on the shortage, this is what has fed into these price rises as the shortage of chips has seen the price of them increase, which the customer in turn bears part of the cost for.
Global vehicle production is set to be reduced by as much as 4 million units in 2022 according to industry journal Automotive News. With COVID-related factory shutdowns another element to consider on top of parts shortages, manufacturers' bottom lines will ensure prices continue to go skyward or at the very least see lower-spec'd cars sell at existing price points.
Production slowing so significantly also has the side effect of the demand for steel lowering, which has sent the price of it to an all-time high over the past 2 years making it another element of automotive production costs that has increased.
Only set to see new vehicle costs increase further is the rising price of nickel in the wake of Russia's invasion of Ukraine. With heavily-sanctioned Russia being the world's third largest nickel producer, nickel shortages are already beginning to be seen, with this having the greatest effect on the production of electric vehicles.
This is bad timing for the small but rapidly growing EV market in Australia, as with petrol prices currently at an all-time high due to this conflict in Europe, demand for electric and hybrid vehicles is only set to increase further.
With new vehicle prices so globally affected, this has also had an impact on the used car market. With no wait times for production to commence, near-new used vehicles are selling for new car prices – primarily, because time is money and the wait is removed.
What are some ways you can save money on a new car?
- Finance is one way of offsetting a hefty initial purchase price. Loans.com.au tells us its new 2.89% variable car loan rate is the lowest on the market.
- Always try to negotiate the price whenever purchasing a vehicle – you can use things like stamp duty and other on-road costs as good leverage to make a deal. Also, it's worth seeing whether any discounts relevant to your profession or employer may apply. Do note though, that some manufacturers operate with a non-negotiable pricing model. Noteworthy examples include Honda, Mercedes-Benz, Genesis and Tesla.
- Consider the timing of when you purchase a new vehicle, as seasonal sales such as at the end of the financial year will help save you money.
- Do your research to see what your current vehicle may be worth as a trade-in, as used car prices are also up currently due to increased demand in light of new vehicle stock shortages.
- For those looking at purchasing an EV, it's worth looking at what subsidies and rebates apply in your state, as local governments vary in what they offer.