How does inflation affect your car budget?

Rising energy fuels inflation

Since last spring, the rise in energy and raw materials prices has added to the upward movement in domestic prices in the automotive sector observed for several years.

“In 2022, the cost of electricity is, on average, 80% higher than in 2021”sums up in an interview with Ouest-France Frank Roubanovitch, president of CLEEE(1), the committee that brings together large French companies that buy their electricity and gas on the free market (from SNCF to Carrefour or Accor groups).

And he predicts this increase will continue into 2023. This increase in energy has a strong impact on all industrial processes, including baking and high temperatures, such as smelting, tire manufacturing or glass production, and is reflected in both the price of new cars and the in repair costs.

The 2022 barometer of the repair network estimated, analyzing the prices of 300,000 references, that auto parts increased by 10% on average in the last twelve months.

And Jonathan Bloch, managing director of idGarages, can indicate that repairers are trying to offer more suitable deals with private label parts or giving discounts, the increase is there.

Recently, the purchase of two standard-size tires showed that the latter increased by 30% in five years. And such examples are numerous.

most expensive new cars

We’ve already documented the rise in car prices in issue 1109 of May 19, but it’s worth going back to it. Indeed, after an annual increase of 2.7% over the last three years for a Peugeot 3008 PureTech 130 Allure with automatic gearbox, its price has reached €37,970, that is, an increase of 2.5% in five months.

At Renault, the increase is less pronounced, but when orders for LPG Clio and Captur were reopened, the latter saw its price increase by €200. It is worth remembering that Renault prices have increased by an average of 3% in the last two years.

Builders are aware that rising prices are driving them away from a growing portion of their customers. They seek to limit their costs, as shown by European records that place two Dacias among the top five sales of last July (2nd place for the Sandero and 5th for the Duster).

Dacia’s progress in Europe is based on both its LPG offering and its affordable prices. This point has not escaped the competitors of the Romanian brand: Peugeot has just combined its first trim level, Like, and its electric motorization to offer a €33,000 access e-208.

Read too:

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Towards the tram at 100 euros a month?

This e-208 Like can be the subject of a rental offer of €208 per month after an initial rent of €3,900. The only way to lower monthly fees is to increase the first rent and have the highest end-of-contract value possible.

By combining all purchase aids (bonus, maximum conversion bonus and distance between home and work help), Peugeot offers this e-208 at €150 per month. It should be remembered, however, that the conditions for obtaining the €5,000 conversion bonus are so unrealistic (a reference tax income per unit of less than €6,300) that this regime only applies to families for which the purchase of an automobile is not part of your financial worries.

However, an “electric car for 100 euros a month” is part of President Macron’s campaign promises. Minister delegate responsible for public accounts, Gabriel Attal indicated at the end of August in LCI that the government “was working on this and trying to define an implementation date”.

It remains to be seen with which financing device and which car. There is in fact a Dacia Spring at €120 per month raising the first rent to €0 for the recipients of the €2500 conversion bonus. But politically, can the government build its €100 bid on the basis of a car made in China?

What if the government partner for an electric car at €100 a month was Renault with a Zoe at the end of its career supported by the group’s successful financing subsidiaries?

Welcome fuel discounts

Since 1 September, the discount on the price of fuel granted by the government has reached 30 euro cents, that is, 12 more than in the summer. To this 30 cents, TotalEnergies adds a 20 cents discount. Starting November 1, these discounts will drop to 20 cents (10 cents each).

Everyone could appreciate the drop in prices at the pump, 60 to 65 cents from the spring high, to the point that some TotalEnergies stations sometimes run out of gas. But this drop in fuel prices is also due to the drop in oil prices in international markets.

Over the summer, the price of a barrel steadily retreated to $90, relegating the March 8, 2022 peak of $127 per barrel to the memory post. Note, however, that black gold is paid in dollars, a currency against which the euro has lost 10% of its value since mid-March. The price of oil purchased in euros has not fallen by 30%, but by only 20%.

An unchanged conversion bonus

When scrapping a vehicle classified as Crit’Air 3 and above (ie petrol vehicles whose first registration dates from before 2006, before 2011 for diesel), it is possible to benefit from the conversion bonus. These are electric or gasoline-powered vehicles, new or used.

For the purchase of a petrol car, the premium can vary between €1500 and €3000. For an electric car, it amounts to €2500 to €5000. These amounts depend on many criteria: reference tax income level, domicile or place of work located in a low emission zone (ZFE), distance between domicile and place of work, domicile located in Guadeloupe, Martinique, Guyana, Réunion and Mayotte and , finally, the annual mileage traveled as a professional.

A revamped and slightly modified bonus

The bonus amount in effect during the first half of 2022 for the purchase of an electric car has been extended to the entire year 2022. The acquisition cost ceiling that was taken into account to obtain the maximum bonus of €6,000 has been further increased. to €47,000 from €45,000 previously.

This bonus is still limited to 27% of the acquisition cost. This means that the maximum bonus to buy a Dacia Spring at €19,800 is €5,346. The same device also concerns the Skoda Citigo iV and Seat Mii Electric in their entry-level versions.

A €2,000 bonus applies to electric vehicles priced between €47,000 and €60,000. Note that the legislator considers that only cars with CO2 emissions of 0 g/km are eligible for this bonus. Plug-in hybrids receive a €1,000 bonus if they meet three criteria: price below €50,000, maximum CO2 of 50 g/km and urban range in the WLTP(2) cycle of more than 50 km.

Finally, remember that since April 28, the recipient of the ecological bonus agrees to keep his car for one year instead of the previous 6 months. This modification is aimed at smart people who resell electric cars abroad after 6 months, making a substantial profit in the operation.

the opinion of Automatic Diary

Inflation exists. It weighs on the driver’s budget in several ways: rising prices for new cars, but also for used cars due to their scarcity, while rising prices for energy and raw materials drive up repair and maintenance costs.

This upward movement will continue through the end of the year and into 2023. To mitigate it, the government occasionally plays with tax levels (fuels) and asks companies to make an effort (car insurance).

Find our “Fortnight Survey” at Automatic Diary No. 1117 of 09/22/2022.

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