We’ve probably said it a hundred times over the last several years and we’ll continue saying it until the situation improves. North American vehicle prices are totally out of whack in relation to what consumers can actually afford. Reports presently have the average person spending just shy of $50,000 on a new vehicle in the United States while Canadians are spending roughly $64,500 CAD — about $47,000 USD. But what are people spending in the rest of the world?
Sources differ. However, the average new vehicle in China is supposed to be selling for 165,000 yuan — which is just a hair under $23,000 USD.
While vehicle prices have continued to climb in North America, China has actually been pressuring automakers to limit production and avoid pricing wars. We’ve covered why this is happening in the past. But the short answer is that the government drove localized competition to become more globally competitive and now finds itself with an oversupply of vehicles.
China likewise offers vehicles in segments that basically don’t exist on our market and scads of EVs that have yet to find buyers. Of course, many of these would not sell on our market. For example, China offers what are effectively street-legal golf carts for prices for well below $2,000 USD.
But it also boasts models that would rival (at least on paper) something like a Honda Civic for prices under $15,000. For example, the current Chery Arrizo (below) competes in the same segment and retails for anywhere between 80,000 to 107,000 yuan ($11,200-15,000 USD). While it lacks some of the latest tech features found on Western models, it’s about as well equipped as a U.S. market compact sedan would have been about six years ago.
Like the current-generation Honda Civic, the base Chery Arrizo comes with a 1.5-liter turbo and continuously variable transmission. But the former starts around $25,000 on our market. Does that make the Honda worse? Probably not. However, it’s hard to argue with the pricing disparity and the fact that many of the same models sold in the United States, often trade in China for significantly less money.
Europe also has an average new vehicle transaction price that’s decidedly lower than what’s on our market. At the time of this writing, Europeans are allegedly spending about €33,000 on the typical car. That’s about $39,200 in USD. However, this is another market that sells scads of vehicles that would be deemed too small for American roadways. Europeans typically drive shorter distances and spend a lot more time in cramped urban environments, making ultra-small city cars relatively popular.
This also means that the top end of the European market doesn’t inflate the average by way of massive SUVs and pickups toying with nearly six-figure MSRPs. Europe also sees sweeping differences in average incomes between individual countries. So already cheap vehicles like the base Dacia Sandero could retail for anywhere between €9,500 and €14,000 (about $13,000-$16,700 USD) depending on where it’s being sold.
Japan is in a similar situation. A lack of space has encouraged small, economical vehicles to take priority. Most estimates claim that the average new vehicle purchasing price is somewhere between ¥1,500,000 and ¥3,000,000. That’s roughly $10,300 to $20,500 USD. But we’ve also seen estimates closer to ¥4,000,000 (about $27,500 USD).
However, only about 70 percent of Japanese households actually own a car and larger models are limited to wealthier households that can afford the higher taxes and a space needed to park them. Rural ownership is far more common. But often skews toward affordable, utilitarian models. Think Toyota Yaris, Corolla, or any number of tiny kei cars/trucks.
New vehicle transactions in Russia are supposed to be around 3 million rubles (around $36,000 USD). But this is supposed to vary widely upon where the vehicle is sourced. Domestic-made vehicles are alleged to be significantly cheaper, averaging closer to 1.5 million rubles. Meanwhile, European-made vehicles trade closer to 4 million rubles while Chinese brands are supposed to average nearer to 2.5 million rubles.
While India was known for having some of the cheapest new vehicles on the planet, regulatory changes have seen valuations spike massively over the last several years. Despite the nation not having the best internal tracking for such things, the current average new vehicle price is now assumed to be above ₹11.5 lakh. That’s about $13,000 USD.
However, India is supposed to have seen an over 50 percent increase in new vehicle pricing over the last three years. So it would have been closer to $7,000 prior to 2020. While that seems untenable, it’s actually supposed to be working out. India presently serves as the third largest vehicle market in the world and is reportedly growing thanks to Western tech companies setting up data hubs within the region as it advances its own tech industry — resulting in an influx of cash.
Despite sudden increase in price, and ongoing wealth inequality within the region, a meaningful portion of India’s economy can supposedly support the price increases. At the same time, budget-friendly models have lingered. For example, the Maruti Suzuki Wagon R (pictured above) continues to be one of the best-selling models in India. Sized roughly the same as a Mitsubishi Mirage, the model presently starts around ₹5.79 lakh or about $6,500 USD.
Like many countries within the region, motorcycles and scooters remain a popular alternative for those priced out of the automotive market. This is likewise true of China, Indonesia, and Vietnam.
For those curious, the average MSRP for a new automobile in Vietnam is supposed to be around 390 million VND (about $15,000 USD). However, the accompanying taxes on automobiles and trucks is supposedly so high that it very nearly doubles the total cost of ownership in some cases. There is likewise a major difference between everyday and luxury models, the latter of which would average closer to $65,000 USD. Indonesia sees a better balance at approximately 350 million Indonesia Rupiah (about $21,300). But it’s also seen a massive swell in pricing over the last ten years.
Pivoting to South America, Brazil is supposed to boast steep variations in new vehicle prices depending on where it’s built. Domestic models are relatively affordable, averaging near 80,000 Brazilian Real ($17,000 USD). However, high tax rates drastically increase the true purchasing price — particularly if you’re buying something that’s manufactured outside of the country.
For example, imported compact luxury vehicles that would trade for a hair under $50,000 on our market might retail for closer to $90,000 in Brazil. Columbia is supposed to be a little more stable, nearer to $25,000 USD. However, Argentina is supposed to see staggeringly high new vehicle prices due to taxes and importation fees — often resulting in the same vehicle costing three times as much as seen in neighboring countries.
Closer to home, Mexico is also seeing rising vehicle costs. The estimated average transaction is supposed to be in the neighborhood of 560,000 pesos. That’s about $30,000 USD. But that figure was closer to 300,000 pesos just a few years ago (about $16,400 USD).
Like the United States, Mexico has seen manufacturers culling smaller vehicles from the market. But the nation has also seen a generalized increase in automotive pricing in recent years due to new tariffs and taxes. The market has also pivoted to being more debt prone — like the U.S. and Canada — allowing for some customers to rationalize more expensive purchases. As a byproduct, used vehicle valuations have skyrocketed in Mexico in recent years.
That ought to serve as a decent sampling of vehicular pricing around the globe and the takeaway should be that cars have gotten quite a bit more expensive just about everywhere relative to income. This is undoubtedly a mix of regional tax increases, new tariffs, ever-changing emission and safety regulations, logistical concerns, culling of smaller models, and usual drive for companies to boast ever-growing profit margins.
It also needs to be said that the average household incomes vary widely between regions. The same is true for the number of people making money in said households. Certain cultures trend toward multi-generational dwelling, meaning you might have several adults working full-time jobs under one roof. Others may find it abnormal to have more than one or two individuals employed per home.
Annual income estimates often vary rather broadly. During my research, I found courses claiming the average Chinese family makes anywhere from $13,000 to $60,000 per year. But data on the United States was only marginally better. The median household income is assumed to be somewhere around $80,000 annually. But that’s the middle value and kind of snubs everyone near the bottom of the socioeconomic ladder while grossly underestimating what’s at the top.
The Census Bureau doesn’t even offer the true average (mean) because of wealth consolidation. Expanding income inequality would dramatically skew the data, underscoring just how much wealth has been moved upward in recent years. But most estimates place the figure somewhere between $120,000 and $200,000 annually. More than enough to buy a decked-out Ford F-Series without going into copious amounts of debt.
With that in mind, your author opted to gloss over the average incomes (this article is long enough already) and would encourage you to do your own research.
[Images: Toyota; Chery; Dacia; Suzuki; Nissan; Ford]
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