Opinion | Are new cars actually getting more expensive?

The new Volkswagen Golf, and the excellent revised GTI in particular, got us wondering. Just how much more expensive are new cars compared to their predecessors? 

2017 New Volkswagen Mk7.5 Golf GTI

Having already won rave reviews from both print and online media, the Mk7.5 Volkswagen Golf GTI is already attracting attention. Yet a lot of the Internet comments seem to take umbrage at one particular fact – the cost. To clarify, the new Golf GTI has a list price starting at £27,865. As with any modern car, there is the huge temptation to run wild with the extras, but that basic amount will get you a brand-new three-door GTI, with a manual gearbox. No options, no fancy technology packages, not even metallic paint. Signature GTI colours like Tornado Red will add an extra £250, with metallics needing £570. In short, it’s rather easy to spec’ a GTI which costs over £30,000. Shock, horror, Internet outrage.

The most recent time a new Golf GTI garnered such positive attention was with the introduction of the Mk5 in early 2005. After the lacklustre Mk4 effort, the all-new GTI was an absolute revelation. Tartan seats helped, too. Yet when first introduced, the new Mk5 GTI had a starting price of just £19,995. Yes really, less than £20,000, and although the amount did rise shortly afterward, that’s the value we’ve used for comparison.

2005 Volkswagen MkV Golf GTI

A difference of £7,870 equates to a substantial sounding 39.4% increase in those twelve years between 2005 and 2017! On the other hand, horsepower has gone from 197hp in the Mk5 GTI, to 230hp in the Mk7.5, a jump of only 17%. If it had followed the same pattern as pricing, new GTI models should be rolling out the factory with 274hp. So have Volkswagen left new GTI buyers shortchanged?

Well no, actually. Inflation on the cost of goods and services in the UK has risen on average by around 2.9% each year. That 2.9% figure is based on the Bank of England’s CPI information, and there is little difference when using inflation calculators that rely on RPI data instead. We’re not going to delve into A-Level economics and debate the differences here – this is a car blog, not the Financial Times.

2017 New Volkswagen Mk7.5 Golf GTI

Inflation between March 2005 and March 2017 totals roughly – wait for it – 39%. Meaning a new Mk7.5 Golf GTI costs within £75 of what the financial data tells us it should do in 2017. It also means we’re getting a better deal in 2017 with 230hp, and the continuous improvement in technology and specification that has taken place in the last decade. So the next time someone exclaims the new Golf GTI is far too expensive, feel free to shut them down with data.

We couldn’t just leave it at one car, however. The Golf GTI may happen to be a freak automotive bellwether, so we checked out the new Golf R, just to be sure. But this time we went even further back with our research. All the way back to 2002, and the introduction of the Mk4 R32.

2002 Volkswagen Mk4 Golf R32

Limited units of the Mk4 Golf R32 were sold in 2002, with more arriving in 2003. But those first cars retailed for £22,608 in three-door specification, making 237hp from the sonorous 3.2-litre V6 engine. It reminded the automotive world how good a quick Golf could be, even in those dark days, and now has a definitive cult following.

Fast-forward to 2017, and the new Mk7.5 Golf R will cost you £31,865 for a three-door with a manual gearbox. Comparing like-for-like, that shows a jump of £9,257 between late 2002 and early 2017. Or an increase just shy of 41% from the Mk4 price. So what about inflation for the same period? A hefty 49%, meaning a new Golf R should actually cost almost £33,700 in today’s pricing. Shh, don’t tell Volkswagen, but it looks like we’re possibly getting something of a bargain with this latest 310hp car.

2017 New Volkswagen Mk7.5 Golf R

I think this means we can sign Volkswagen off as being transparent. Well, when it comes to pricing at least. But what about BMW – a brand often associated with making customers work for their money?

The brand-new 5 Series, in 520d SE specification, costs from £36,270, and like all new 5 Series models today comes with a standard automatic gearbox only. Cast your mind back to January 2010, and the BMW F10 520d SE retailed at £28,165, with an automatic transmission available only as an additional £1,435 cost option. Such is progress.

This is the new one. Honest.

In those seven years that’s an increase of £8,105, or 28.8%. However, if we factor in the price of adding a self-shifting transmission to the 2010 520d SE, the increase becomes just 22.5% at £6,670.

Inflation for the period between early 2010 and today averaged around 21%, meaning the 520d has seen prices increase slightly ahead of inflation by 1.5%, or less than £450. Hardly a huge amount in the grand scheme of things, and no doubt BMW would point to the improved standard equipment level of the new 5 Series to cover that difference. So whilst an entry-level 520d SE might seem extortionate at over £36,000, it’s not much more than what market forces would deem appropriate.

1987 BMW E30 M3

Finally, we checked out a retro machine that is currently going through a faintly ridiculous hyperinflation in values. The BMW E30 M3 – that iconic 1980s homologation special – had a retail price of £22,750 in 1987. Engine output at just 212hp might seem slightly tame by modern standards, but it hasn’t stopped the meteoric rise of E30 M3 prices, with even tatty non-running cars worth at least £25,000 today.

Technically the car on the left is a Sport Evolution. But you get the idea.

The M3 today is a four-door saloon, so we’ve used the M4 Coupé for comparison instead. Costing from £57,815 in 2017, that’s an increase of 154% in 30 years. Which sounds like a giant increase but, once again, is on the money when it comes to inflation. Those three decades cover periods of deep recession and sustained growth in the UK, yet overall inflation for the period runs at 162%. Meaning the M4 should cost £59,600 today to justify that 431hp.

Undoubtedly this is a very small sample, and we have no doubt that more research and digging could unearth examples which buck the trend. Ferrari F40 vs LaFerrari, we’re looking at you. We can at least be heartened that relatively normal machinery appears to be costing what it should do today, when compared to other goods and services. Whether incomes have. Hmm, that’s another question.

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