October 4, 2022

Wire Service Canada

Complete Canadian News World

Cars, prices are out of control as sales rise

The car market last year registered less than 1.5 million cars worth 35.6 billion euros, continuing the race for price hikes that started in 2020. Before Covid, an average of 21,000 euros was enough to sell 19 million cars, thanks to factory pressures aimed at maximizing volumes. and install production plans. From here arose the strong discounts that are exercised in all channels and km0, which is a tool for lowering prices. Already in 2020, the average price increased to 22,400 euros, which is equivalent to 7%. Without 600 million incentives to balance growth, the average net worth would have been €22,800. Last year, the incentives went to 1.5 billion, which is still not enough to cancel the increases that brought the average net price to 24,300 euros, plus another 8%. This is the data, sourced from Value Market Analysis, conducted by the Fleet and Mobility Study Center with support from Dataforce, Mapfre and Texa. There are different reasons.

Product shortages caused by the chip crisis have put sellers in the unusually nice position of being able to keep discounts to a minimum. Then, they restricted self-registration and rental car supplies, which helped drive up average value as both were focused on small cars. Meanwhile, home price listings have experienced increases not seen in years. The strategy has been announced for some time, in response to investments in electrification, but is nothing short of counterproductive. At one time, there was a rumor among economists that a decrease in the quantities purchased corresponds to an increase in the price. Finally, but less decisively, the mix turned to petrol or diesel hybrids, which weigh in at more than a third of the market with a value/volume ratio above one, where petrol temperatures are much lower.

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Electric has an unbalanced ratio (costs a lot) but the marginal share doesn’t affect the average that much. Statistics raise some questions. If there are more buyers than cars for sale, how effective are the incentives? More than just spurring already excessive demand, it seemed like a gift to the few who were able to buy. Again, if builders ask for, and receive assistance from the government, 1,650 million euros in taxpayers’ money, and at the same time increase their price lists, what effects do they produce? Do they encourage customers with incentives with one hand and discourage them with the other? Finally, if all this poverty is determined by Commission policies, is it appropriate for consumers and taxpayers to pay, rather than bill certain breeds to Brussels?