Increase in New Car Prices in Germany Outpaces Rise of Incomes, Findings Reveal
Deteriorating Car Affordability in Germany Highlighted
A recent study reveals an increasing unaffordability of new cars in Germany, as prices have escalated by 40 percent over the past five years, despite a relatively stagnant growth in net annual incomes. This disconcerting trend has been attributed to a burgeoning shift towards electric powertrains and other economic factors.
According to an analysis by consultancy firm Oliver Wyman and market researchers at Jato Dynamics, the gap between net income and new car prices has expanded significantly between 2019 and 2024. In 2019, the average new car in Germany cost around €30,200 and accounted for 1.16 times the annual income. By 2024, the average cost had jumped to €41,800, amounting to 1.29 times the annual income.
The shift towards electric and hybrid vehicles is a key driver behind the increased car prices, accounting for nearly half of the escalation. Inflation and other economic factors also play a role in the price surge.
The escalating cost of new cars has led to a decrease in the availability of affordable entry-level models. Consequently, more consumers are resorting to financing, leasing offers, or purchasing cheaper used cars. The number of new car purchases in Germany has consequently dropped by 22 percent during the analysis period.
Despite higher acquisition costs, experts assert that new electric cars may be more cost-effective in the long run. The Fraunhofer Institute for Systems and Innovation Research concluded in a recent study that mid-sized electric vehicles can be more cost-effective than their internal combustion engine counterparts after just three years of typical use and with their own charging capability. The researchers consider not only cheaper energy but also lower maintenance costs as contributing factors.
In Germany, while consumer interest in electric and plug-in hybrid vehicles is growing, affordability remains a concern. Prospective buyers are increasingly considering more sustainable options, with approximately 26 percent open to purchasing an electric vehicle, and 23 percent considering plug-in hybrids.
dpa/ar
What is the main factor contributing to the increase in the affordability gap between new cars and net income in Germany from 2019 to 2024, as mentioned in the analysis by Oliver Wyman and Jato Dynamics?
The shift towards electric and hybrid vehicles is a significant contributor to the escalating cost of new cars in Germany, accounting for nearly half of the price surge.
