At least in Europe, car are more expensive to make than 20 years ago, even inflation adjusted, as the EU keeps adding new and stricter regulations.
* Lower emissions, requiring more expensive engines.
* Making cars easier to recycle (but more expensive to build)
* Adding mandatory accessories for safety reasons. Here you can find an example of what that has been recently added. [1]. Nice stuff, but it doesn't come for free.
You forgot the largest factor for price increases: manufacturers positioning all models as luxury ones. All the while cutting corners on quality control. Take French ones, they went from not the most well built but affordable cars for the masses to pseudo luxury expensive cars that still fall to pieces after 5 years. Who’s gonna buy that?
Stellantis for example knew about the problem of their engine blowing up since before 2020, but they chose to ignore it. Small turbocompressed engines are or new at this point and how to make them reliable is known too.
Or take VW, cheating before 2015 so regulation is not an excuse, and since a decade most failures are parts like coolant circuits because of cheap plastic, gearboxes, and a lot of non safety related electronics features. And what is the replacement for family mmovers? Luxury SUVs or 75k€ iD Buzz.
Edit: So in short multiple things can be true: legal reasons for price increases, but also bad marketing choices.
Difficult to make a small car that has all the safety and matches the price. It is easier to justify the bigger car at its price than the smaller car, since 2x bigger car will not be 2x more expensive to make.
It's true even if you don't consider EVs. People buy more SUVs, for one thing, but a 2025 VW Golf is also larger and heavier than a 2005 Golf, which is larger and heavier than a 1985 Golf.
Compact cars in 2025 are the size mid size cars used to be a couple of decades ago.
Meanwhile, the average family size is getting smaller and smaller and the average occupancy is ever closer to 1.
Cars today are better than 50 years ago, but not much better than 15 years ago.
You must be young.
Cars used to last five years before falling apart. It helped drive the whole auto leasing industry, because nobody wanted something that turned into an old rust bucket in half a decade.
The reliable Japanese cars came in, and every marker suddenly started offering five, eight, and even ten year partial warranties.
Today, a ten-year-old car is very common. I kept mine until it was 12-years-old, and in that time it never had a breakdown. Just tires, oil changes, and many lightbulbs. My previous cars (Volkswagen, Isuzu, Ford, Ford, Mercury) had long been scrapped by then.
This is honestly tighter then you might think accounting for inflation. A 2000 1$ is 1.87$ today. 2005 seems like they should be doing a lot better since it's 1.65$ but it's not nearly as gangbusters as this comes across.
That doesn't cope with less vehicles being sold overall and inflation, even if margins on a single car have never been higher I think (at least in US).
