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.

Edit2: actual study showing at least half the price increase was chosen: https://institut-mobilites-en-transition.org/publications/le...

Cars have also gotten much bigger, heavier and more powerful.

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.

That's not the case in EU if we put EVs into separate category since they all have a battery weight toll.

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.