New car prices have risen by a staggering 43% since 2018, new research from Auto Trader has revealed.
At the start of 2018, the average new car cost £27,305. Fast-forward five years, and the average new car list price is a heady £39,038.
New car prices have risen consistently over the years, peaking with growth of 12 percent at the start of 2020, while prices rose 9 percent at the start of 2023.
Auto Trader experts say some of the increase can be put down to the changing preferences of British new car buyers – namely, the shift from regular hatchbacks to SUVs.
Back in 2018, hatchbacks took almost 1 in 3 new car sales, making them the most popular type of new car.
However, in 2023, SUVs are by far the preferred body type – accounting for over 40 percent of new car sales.
Barely 1 in 5 new car buyers now favour hatchbacks.
Electrifying prices
However, the biggest impact on the rise in new car prices is the move to electric cars.
The share of the more expensive electric cars has increased from 1 percent of all new cars on sale to 12 percent over the past five years, while hybrids have grown from 2 percent to 14 percent.
In contrast, the share of new diesel cars has shrunk from 46 percent of the new car marketplace, to just 17 percent.
Add in the significant rise in inflation leading to increased borrowing costs, and Brits are spending a growing amount per month on new cars.
As the Bank of England base rate has risen from 0.5 percent to 4.0 percent, so too have PCP finance rates gone up.
Auto Trader research shows average new car APRs powering finance calculators have risen from 5.1 percent in January 2022, to 8.1 percent at the start of this year.
At least, adds the new and used car marketplace, used car prices are following suit: they have risen for 35 months in a row.
The average price of a used car is up by around £4,000 since the start of the pandemic.
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