Are car prices going up faster than inflation?

Tristan Young

14 Sep 2021

1/17
New car prices always go up. But do prices rise faster than inflation? And if it does, is all the extra standard equipment worth it?

We all know that house prices rise faster than inflation, but what about car prices? Did the cost of a new car in the 60s through to the 00s keep track with inflation?


To find out, we’ve picked a host of iconic cars from across the years to see how they’ve performed.


But before we get into the pricing details, it’s worth noting the price changes and inflation on a couple of other key purchase items.


House prices are the obvious one to look at.


Fifty years ago, in 1971, the average house price was £4,650 according to the Land Registry. Inflation adjusted, that’s £67,216. However, in 2021, the actual current UK average house price is in fact £254,624. That’s quite a difference and neatly illustrates how not everything rises in line with inflation.


Petrol, on the other-hand, has level pegged with inflation over the same time frame. In 1971 a litre of petrol (although, obviously at the time is was sold in gallons), was the equivalent of nine pence.


Put this figure into the Bank of England’s inflation calculator and out comes a figure of £1.30, only five pence short of the actual average cost of regular unleaded.


So on to the cars.


Land Rover Defender vs Series I



Defender wasn’t the name used at launch, but when the Land Rover Series 1 was launched in 1949 the price new started at £450. Fast forward 72 years and inflation would see that increase to £16,261.


The starting price of the current Land Rover Defender is £44,210. Or, 2.7 times as expensive.


At first glance, that’s quite the hike in price. However, the current car has little in common with the original car other than they’re both highly accomplished off-roaders.



What you now get for your money in terms of equipment, comfort levels, refinement, pace and safety is amazing.


It’s this theme of additional features being invented and added to cars as options at first and then being added as standard that shows how cars have progressed in the past 100-plus years.


Mini



The original Mini was launched in 1959 and cost from £495. Inflation adjusted that’s £11,778 in today’s money.



Start price of the current BMW Mini is £17,840 or 1.5 times as expensive as the 1859 car.


Aston Martin DB5 vs DB11



Even James Bond isn’t immune from increasing car prices. In 1963 a DB5 cost £4,248 new, which now works out at £90,970 inflation adjusted.



While there isn’t a DB5 on sale today in Aston Martin’s line up, the closest equivalent is probably a DB11 which costs from £152,865. That’s 1.7 times as expensive.


Ford Cortina vs Mondeo



Fifty years ago the Mk3 Cortina was launched with an entry price of less than £1,000 for the two-door 1300. Given the Ford Mondeo isn’t available as a two-door, it’s probably fairer to use the Cortina 4dr 1300 which started from £1,150. Inflation adjusted, that’s £16,623.



Today a Mondeo costs 1.5 times as much, starting from £25,565.


Mercedes S-class



Not all cars cost more now than they did when they were launched. When Mercedes launched the first S-class, codenamed W116, it cost from £10,365 new in 1972. Inflation adjusted that’s £139,860. Currently the starting price for an S-class is £80,450.



This makes the S-class seem a complete bargain against most other cars and also against inflation as it’s reduced in price by more than a third.


VW Golf



Volkswagen launched the Golf in the UK in 1975 at an entry price of £1,294 for a two-door, but the four-door cost from £1,517. That bought you the 1100 L and inflation adjusted that’s £16,168.



Today’s starting is £21,145 for the cheapest Golf, or 1.3 times the price.


Ford Fiesta



The UK’s best selling car was launched in 1977 with prices from £1,856. According to the Bank of England’s inflation calculator, that amount would now be £11,792. However, Ford’s starting price for the current Fiesta is now £16,645 or 1.4 times as much.



Skoda Superb



If you think it’s just cars from fifty-plus years ago that have gone up in price in real terms, then a quick check of a more recent launch shows that it’s still going on.


The Skoda Superb was launched 20 years ago. The entry level 2.0-litre Classic cost £14,020. Inflation adjusted that’s £23,324 in today’s money.



Today the Superb range starts from £26,415, or just 1.1 times as expensive.


Which considering how the quality, equipment, safety and performance has improved, this seems like a very reasonable increase.

360° View

Full Specs

Used Car

Videos

News

Search any model to find out everything you need to know. Get full specs, news, reviews, videos and much more!

Tristan Young

14 Sep 2021