Why car prices are going backwards: 1989 prices today

Published: 06 May 2009

Alfa Romeo today cleverly publicised the effective price cut of its rather tasty Mito by announcing a price rewind to 1989 levels. Yes, Brits can now buy a Mito supermini for less than £9000 – thanks to the Government’s scrappage scheme.

The Mito 1.4 16v Turismo now costs £8995 in the UK, once you take into account the scheme’s £1000 discounts from the Government and the manufacturer. Alfa Romeo points out that the last time you could buy one of its cars for less than £9000 was the five-door Alfa 33 in 1989. Which got me thinking.

Attractive as the Mito deal is, it just serves to highlight the price deflation that’s been at play in the motor industry for the past two decades. In the name of research, I pored over a 1989 issue of CAR Magazine and found some surprising price comparisons:

1989 price  

2009 price equivalent

Fiat Panda 750L £4160

Fiat Panda 1.1 Active Aero £4995

Mazda MX-5 £15,580 

Mazda MX-5 £16,340 

Volvo 480 ES £12,640

Volvo C30 1.6 SE £14,995

VW Corrado 16v £16,699

VW Scirocco 1.4 TSI £19,110

 

It’s a sharp reminder that modern industrial practices – the giant conglomerates and efficiencies of scale they bring – have enabled prices to go backwards in real terms. Especially when you factor in inflation: the Retail Price Index has risen by 54.9% since 1989.

Unlike some who’ve jumped aboard the bandwagon, I have reservations over the Government’s scrappage scheme. Now the small print is emerging, it seems certain that the £2000 minimum incentive is merely comparable (or, at worst, less) than the rife discounting that the industry’s used to shift metal for ages.

But with manufacturers on their knees and salesmen twiddling their thumbs, it’s still a great time to buy a car. I’m about to embark on this exercise for a family member and look forward to practising what I preach…

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By Tim Pollard

Editorial director of CAR's digital publishing arm. Motoring news magnet

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