In May 2023, secondhand cars in Luxembourg saw a price increase of over 6% compared to a year ago, while new car prices rose by 1.8%. However, prices in the grand duchy remain moderate compared to euro area averages.

With 681 registered cars per thousand inhabitants in 2021, Luxembourg boasts one of the highest motorisation ratios in the European Union. Nearly one-fifth of these cars are less than two years old, making it the youngest fleet in the EU and indicating a high turnover.

But when looking at price changes in Luxembourg compared to neighbouring countries and euro area averages, the cost of buying a vehicle is more resilient to sharp increases.

Secondhand car prices

Despite a modest year-on-year 2% consumer inflation recorded in Luxembourg in May 2023 according to Eurostat’s flash estimates, the lowest among euro area member states, overall prices remain 16% higher than the 2018 averages.

To provide a better visual representation of price evolution and facilitate comparisons between categories, prices are base indexed to 2018 (=100).

In comparison, new passenger cars were 10% more expensive than in 2018, while secondhand cars experienced a nearly 5% increase during the same period.

On a year-on-year basis, this translates to a 1.8% increase for new cars and a 6.5% increase for secondhand cars.

The euro area as a whole experienced more significant price changes for secondhand cars.

In May 2023, prices were up by 8.3% compared to May 2022 and 20.5% compared to the 2018 averages. Among neighbouring countries, Belgium witnessed the highest increase, with an 8.4% yearly growth and a whopping 42.3% compared to the 2019 averages.

In contrast, price increases in France were less prominent, with a 5% increase--lower than the observed increase in Luxembourg.

New car prices were not immune to these changes either.

New car prices

New car prices across the euro area also saw appreciation, with a 6% increase in May 2023 compared to the previous year and a 19.2% increase compared to 2018 averages.

Germany reported the highest price hike, reaching 21.1% compared to 2018 averages.

However, the evolution of prices for new cars are less diversified since 2018 compared to secondhand car prices.

Car prices have displayed a slower trajectory than that of headline inflation. However, the automotive industry, as well as dealers and servicing companies, are just a step behind in adjusting to these changes.