A joint study released today by automotive intelligence leader JATO Dynamics and global consulting firm Oliver Wyman has revealed a stark warning for the auto industry—the transition to electrified vehicles is driving up prices and pushing buyers out of the market.
Titled The Automotive Pricing Study, the report examines the profound impact of the shift towards electrification on sales volumes and vehicle affordability between 2019 and 2024. It finds that vehicle prices surged by 40%, while sales volumes plummeted by 22%, highlighting a growing disconnect between product pricing and consumer purchasing power.
While Battery Electric Vehicles (BEVs) are a major focus of the industry’s evolution, the study clarifies that only one-third of the price hike is attributed to BEVs. The remaining increases stem from inflation, economic pressure, and the rising cost of other electrified powertrains such as Mild Hybrid Electric Vehicles (MHEVs) and Plug-in Hybrid Electric Vehicles (PHEVs).
The decline in affordability is especially pronounced in the sub-€30,000 price segment, where sales have taken the biggest hit. Despite a 24% rise in net salaries in Germany during this period, overall car affordability dropped by 11% due to a lack of budget-friendly options. Consumers are increasingly turning to used cars, leasing, and long-term financing to cope with rising costs.
Not all manufacturers have suffered. The report spotlights one OEM that managed to increase its sales by 19% despite a 48% hike in prices, by maintaining an average vehicle price near €15,000, proving that affordable models still have high demand.
“The affordability crisis in the automotive industry calls for immediate and strategic action from OEMs and dealers,” said Steffen Rilling, Associate Partner at Oliver Wyman. “Manufacturers must revise their product and pricing strategies to survive in a market where buyers are becoming more selective and cost-conscious.”
David Di Girolamo, Global Head of Professional Services at JATO, added: “With so many changes occurring rapidly, it’s essential to analyze vehicle pricing at a granular level. This study exposes the hidden effects of electrification, OEM strategy shifts, and evolving consumer behavior.”
The study warns that OEMs may struggle to remain profitable in a shrinking market unless they swiftly adapt their offerings. As buyers grow more price-sensitive, the automotive industry must reassess how it delivers value and sustainability without compromising accessibility.
Key Findings at a Glance:
- Vehicle prices up 40%, sales volumes down 22% (2019–2024)
- Only 33% of the price hike due to BEVs; other powertrains and inflation to blame
- Car affordability in Germany down 11%, despite rising salaries
- Entry-level brands maintaining low prices are still thriving
- Financing and used vehicle markets seeing strong growth
As the auto market continues its shift toward electrification, the study serves as a wake-up call for OEMs: electrification alone isn’t enough—affordability must also drive the future of mobility.
