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22 August 2019

EY Price Index: More than half of cars became more expensive year on year. The variety of low-emission vehicles being offered on the Czech market is growing

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  • Base model prices increased by 6.6% on average, prices of fully-loaded models increased by 2.5% year on year
  • The offering of cars with gas engine has fallen 18% year on year, the offering of diesel engines by 22%
  • Passenger car manufacturers are focusing on savings, reducing supplies and the most popular vehicle specifications

EY Price Index

Prague, 23 July 2019QII 2019 brought a 6.6% increase in base model car prices, but only a 2.5% increase in prices of fully-loaded models compared to the same period last year. More than 60% of cars across all trim levels have become more expensive compared to 2018. More and more low-emission vehicles are coming onto the Czech market, while the offering of cars with gas and diesel engines has dropped by 18% and 22%, respectively. The EY Price Index systematically monitors trends in the passenger car market, manufacturer strategies and impacts on consumers.

Base models got more expensive

QII 2019 was characterized by higher base model prices, with the price index increasing from 4.5% in April to 6.6% in July compared with early 2018. Price monitoring indicates that base models are CZK 24,600 more expensive than a year ago, with the lowest trim levels of monitored vehicles increasing by CZK 7,800 in the last quarter. One manufacturer to which the price rise relates is Czech carmaker ŠKODA, which raised the base model price of its best-selling Octavia, second best-selling Fabia and the Kodiaq, among others. The price of the 2020 Superb base model will also go up. Still, base model comparisons involve more than just a change in price.

“In terms of base price tracking, we’re often seeing considerable increases. Customers looking for the lowest price won’t be happy, but practice shows these customers are decreasing in number. For most consumers, in fact, the price shift means an advantage in the form of higher-level base models. A year ago, the customer would have paid more to purchase the same – nowadays basic – model,” says Petr Knap, EY Managing Partner for Automotive for the Central, Eastern and Southeast Europe and Central Asia region.

Base model prices of fewer than 60% of all monitored cars increased compared to the beginning of last year, and more than 30% increased compared to prices this April. This is also true of a typical choice for price-sensitive clients – the Dacia brand – where the base price of the Duster and Sander models increased by CZK 5,000. Paradoxically, the price reduction we’ve seen in the least expensive models can also be observed in premium models of upper mid-range vehicles like the Mercedes Benz E or BMW 5 Series, representing a price reduction of tens of thousands of crowns.

The highest trim levels were cheaper

On the other hand, the price index that maps prices of the most expensive models decreased from 3.9% to 2.5% compared to the previous period. The highest available trim level became an average of CZK 12,100 cheaper compared to April this year. Compared to the beginning of 2018, however, it costs CZK 20,300 more.

Some 61.5% of top-of-the-range vehicles have become more expensive compared to last year, despite the rather limited range of such vehicles and the fact that the highest available trim levels of new models of premium cars are generally cheaper than their predecessors. This applies, for example, to the triad of luxury German SUVs – the Mercedes Benz GLE, BMW X5 and Audi Q7. Compared to the previous period, 20% of models with the highest trim levels have risen in price, while the price of the most expensive fully-loaded models has dropped for 46%. “In general, we can still observe the phenomenon of supply constraints, in particular with outlier models included among the top-level offerings,” says Petr Knap.

Supplies of low-emission vehicles are growing

In addition to price increases, car models of domestic manufacturers have seen a reduction in available versions of individual models in keeping with Czech market trends. This has also happened to sister firm Volkswagen, with the exception of the Tiguan SUV. However, the scope of what’s on offer also affected French car manufacturers and is largely due to the repercussions of last year's WLTP introduction and the outlook for further regulatory measures in terms of passenger car emissions in the future.

“The trend toward savings among carmakers and local dealers is clear from the gradual reduction in the complexity of what’s on offer. In fact, it’s this complexity, i.e. the number of versions and combinations offered, that generally makes automobile production and development more expensive. Logically, then, automakers focus on offering what will appeal to the widest possible range of customers. From the perspective of fewer engine options, the issue of unit homologation that is reasonable in terms of time and cost undoubtedly comes into play. As far as the variety of supplies, it’s a real shame; we’re seeing outlier models that are unique in character, but that unfortunately also have higher consumption and emissions, disappear from the market,” says Petr Knap.

The numbers make this obvious; the number of models on offer (i.e. available trim levels) dropped nearly 16% year on year and 1% compared to the beginning of this year. However, the number of available engine options fell more than the number of offered trim levels compared to last year. For cars with gas engines, the Czech market fell by 18% compared to early 2018 and 5% compared to the last quarter. The offering of diesel cars fell 22% compared to last January but remains the same compared to the last quarter.

A clear market is the increased offering of low-emission vehicles, whether electric cars or plug-in hybrids. Prices of monitored electric vehicles are mostly on the rise due to increased battery capacity. The exception is the fully electric Hyundai Ioniq, which can be purchased for CZK 47,000 less than in early 2018.

Development of the EY Price Index in the last year: Data Chart EY Price Index

Source: EY

About the EY Price Index

The EY Price Index maps the development of passenger car prices on the Czech market since early 2018; over the long term, it reflects quarterly price variations on a sample of 42 vehicle models across market segments based on sales statistics from previous years (these vehicles represent 63% of the cars sold in the Czech Republic). EY monitors prices at the lower end of the market (the cheapest versions of individual models) as well as top-end offerings (the most expensive versions of individual models). EY also analyzes other parameters in the offering of selected cars, e.g. engine type, trim level and their mutual combinations.

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