If you’ve been searching for an affordable new car, your initial sticker shock probably now includes waves of frustration, several headaches, and frazzled nerves. If you’re thinking about delaying the decision until things get better, you’re destined to add disappointment to the mix. Most signs point toward higher new car prices in the foreseeable future.
There are several reasons why cars are getting expensive. Firstly, automakers are discontinuing their cheaper models to focus on more profitable SUVs and pickup trucks. Additionally, government-mandated emissions standards are becoming more strict, and expensive safety features are often required.
In addition to the reasons listed above, computer chip shortages, general supply pipeline issues, and inflationary pressures can impact the cost of building a car at various times. Addressing all of the issues listed above would require thousands of words and dozens of pages. Therefore, in this article, I’ll primarily focus on regulations that have helped increase the cost of buying a car and some that will influence car prices in the future.
What Regulations Are Making Cars Expensive?
Government-mandated regulations that make cars more expensive include safety features and emission control targets. Each required feature raises how much money it takes to manufacture an automobile. In addition, stricter emission standards require costly engineering changes.
Many Safety Features, Once Optional, Are Now Required
Automakers were reluctant to adopt safety features that we now expect to find in even the most basic car throughout much of the twentieth century. The Nash Rambler was the first car to come with lap seat belts in 1950. Volvo introduced shoulder seat belts in 1959. The adoption of this feature was quite slow. The first law requiring seat belt use didn’t pass until 1984 in New York!
General Motors produced the first airbags in 1974, yet they did not become standard equipment on any automobile line in the United States until 1985.
In more recent years, consumers and government regulators have demanded an increasing number of safety features ranging from crumple zones to advanced driver assistance systems (ADAS). As these innovations multiply and governments worldwide mandate their adoption, the cost of cars will continue to rise.
In addition to making purchasing a car more expensive, many high-tech safety systems also make it more expensive to repair a damaged or wrecked car. What were once simple-to-repair (or ignore) fender benders now involve delicate sensors and fragile cameras, which can be difficult and expensive to replace or repair.
Governments Are Enforcing Stricter Emission Standards
Reduced air quality in many urban areas combined with increased concerns regarding global warming has led many governments to legislate lower tailpipe emissions for internal combustion automobiles.
In 2022, the European Union is expected to launch Euro 7, a new emission standard for passenger vehicles. These stricter standards could lead to increases in new car prices ranging from 1500 British pounds (about $1965) to 5000 pounds (over $6500) per vehicle.
Similar legislation is under consideration in other parts of the world, including the United States. Many experts expect strict emission standards to cause a substantial decrease in internal combustion car sales in the next decade.
Henry Ford’s Model T is the car most automobile historians mention when asked about the first affordable car. It was offered in the United States for $850. It had no driver doors, only two forward speeds, and was powered by a 20-horsepower engine.
Adjusted for inflation, that $850 price tag rises to about $25,000 today. In contrast, a 2022 Ford Mustang has a base price of $21,490. When considering how expensive cars are, remembering those numbers will help maintain some perspective.