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Car costs are escalating at a quicker pace than people's earnings.

Purchasing a vehicle transforms into an expense for the privileged

Growth in income-car price inequality occurred between 2019 and 2024.
Growth in income-car price inequality occurred between 2019 and 2024.

Car costs are escalating at a quicker pace than people's earnings.

Germany Witnesses Decreasing Car Affordability

A study conducted by Oliver Wyman and Jato Dynamics reveals a significant decline in the affordability of new cars in Germany between 2019 and 2024. This is due to an alarming gap between the rise in new car prices and annual net income.

Over the stated period, annual net income in Germany has soared by approximately 24 percent, from an average of around 26,100 to nearly 32,400 euros. Conversely, the price of a new car has surged by over 38 percent, from approximately 30,200 to nearly 41,800 euros.

Consequently, the ratio of new car prices to annual net income has risen from 1.16 in 2019 to 1.29 by 2024. This increase indicates a shrinking ability for Germans to afford new vehicles.

It is worth noting that this decline in affordability is further aggravated by the growing preference for more expensive electrified vehicles, accounting for nearly half of the price increase.

Sources: ntv.de, dpa

[1] According to the analysis, annual net income in Germany increased by 24 percent. In 2019, the average annual net income was over 26,100 euros, which increased to nearly 32,400 euros by 2024.

[2] Meanwhile, the price of new cars rose by more than 38 percent from around 30,200 euros in 2019 to nearly 41,800 euros in 2024. This was driven in part by the shift towards pricier electrified vehicles, accounting for nearly half of the price increase.

[3] The Commission, in an effort to minimize this issue, has also adopted a proposal for a directive on the approximation of the laws of Member States relating to the protection of workers from risks related to exposure to ionizing radiation, as the rise in car prices might also affect the industries such as automotive and car-maintenance.

[4] Furthermore, the escalating cost of cars and car maintenance could potentially impact other sectors like finance and transportation, given that a substantial portion of the population might have less purchasing power for non-essential expenses such as travel and lifestyle choices.

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