Why Are New Cars So Expensive?

Buying a car is a serious investment. If you’re going for a new car, you’ll probably have to spend a lot more than if you’re being a used car. But, it’s said that the minute you drive the new car off the lot it loses a lot of value. You can see this for yourself if you try to sell your new car shortly after you buy it, since you won’t be able to get the same price as what you paid for it. But, why is it cheaper, for example, to buy a used Audi A4 in New York than it would be to buy a new Audi A4 of the same year?

Costs Associated with Making Cars

Building cars is expensive, although it doesn’t cost as much as you spend on buying the car. Manufacturers make a lot of cars at once, so they get the benefit of what’s called the economies of scale. This means that because they are making a lot of cars at once, it costs less to make each one than it would to make just a few cars, because some costs don’t increase based on the number of cars made (like the cost of maintaining the factory or buying tools to build the cars).

Research and New Technologies

It takes a lot of high-tech equipment and specialized knowledge to design and build cars, most of which is passed on to us, the ultimate buyers.Car companies must pay for the research they do to make new features and designs. As cars get more advanced, research has to keep up with the rapidly changing environments of our cities, towns, rural areas, roads, and lifestyles. To make cars that really appeal to many people, car companies employ a large research and development team, which ends up costing a lot of the budget for a new car.

Technologies must also meet safety and other regulatory standards before the cars are allowed to be sold in certain countries. Consistently meeting these standards and testing can create higher costs as well.

Car Dealerships

One of the main reasons why new cars can cost so much money, especially in the United States, is because they must be sold from car dealerships. Most dealership use shady sales practices to drastically increase the prices of the cars. It’s not possible to buy a new car in the US from the manufacturer; they must be sold be dealerships. This is arguably one of the biggest factors affecting the price of new cars sold to the average buyer.

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