Hondas have never been described as cheap. But they were more affordable than comparable models sold by brands like BMW and Audi.
However, Honda’s prices have risen sharply over the last few years, leaving customers gasping. You’re not going to find excellent deals for them in the used car market, either.
Here are 7 reasons why Honda cars are so expensive.
1. Supply Chain Problems Raise Honda’s Price
The pandemic caused a global supply chain crisis, and the automobile market has not recovered. Logistics are still causing Honda woe in late 2022, and they’ve announced they’re scaling back by 40% in Japan.
In the US, they announced an 18,000 unit reduction, although some of that is also blamed on an auto industry downturn.
Yet, despite the lack of supposed buyers, Honda seems to believe that they can charge more as there is less supply. It remains to be seen, but the move makes some investors nervous.
2. Semiconductor Shortages Have Hit Honda
The semiconductor shortages are hitting Honda hard. Nor does the shortage look to be fixed any time soon. The crisis is hurting many industries, including smartphones and laptops. Thus, prices are rising globally for a massive range of products.
Nor is the issue a simple “blame the pandemic,” although it started the problem. One of the other issues is that as our desire increases for fancier electronics in a wider range of products, the demand has increased.
Also, the push to go electric is adding to the burden. As Scientific America points out, an EV uses almost twice as many as a regular car.
In addition, there was a fire at a Japanese chipmaker plant, and another in Texas had production problems after their electricity was cut during a Texas power failure. Lack of supply of a valuable good.
But some of this is an automaker foul-up: short-term savings causing a long-term loss. When the pandemic hit, automakers stopped buying chips to reduce the initial loss.
Thus, they got a nasty surprise when they placed their next order: others had scooped them up. Now they are paying dearly, and so too, are their customers.
3. Honda Dropped More Affordable Trims
Honda has dropped the popular and affordable LX trim and their well-priced Special Editions. In their CR-V, The Touring trim is being cast aside for the more expensive Sport Touring trim.
Thus, base prices and options have taken a jump. The move is speculated to be done to recoup losses due to the supply chain squeeze. If this will backfire remains to be seen.
4. Reliability of Hondas Increases Their Desirability
Hondas are heavily desired for their reliability, which keeps their price high. Overall, Honda deserves the reputation, but they had their clunkers (the 1992 Honda CRX Del Sol is infamous, as is the 2005 Accord Hybrid).
But for all the facts and figures, what matters is what the public believes and is willing to pay for.
5. Honda’s Affordable Maintenance Increases Demand
Hondas have a reputation for affordable maintenance. But, alas, manufacturers take advantage of their reputation, raising prices, knowing some customers will pay more upfront with the promise of saving later.
Admittedly, Honda’s are not necessarily the cheapest to maintain. Consumer Reports demonstrates that some brands shine beyond Honda. The closest competitor for like-to-like is Toyota, and they do tend to edge Honda out.
But overall, Honda is consistently featured in the top ten. For example, in 2021, they were ranked number 1 by WePredict in non-premium brands.
The report listed the average 3-month service and warranty costs for Honda to be 21 dollars, compared to the average of 42, and the lowest ranked GMC at 132.
6. Honda’s Are Popular Due To Fuel Efficiency
Hondas have a solid reputation for being fuel efficient. In 2021, Honda was ranked number one by the United States Environmental Protection Agency in the category of full-line automakers and second in “real world” fuel economy in its fleet average. They also pumped out the least CO2 emissions
For people sensitive to price fluctuations at the pump, this is a huge consideration when they go car shopping. As a result, they are willing to pay more upfront to save money later.
Also, while many people would love to own an EV, they’re too expensive for many buyers. Thus, Honda is one of the best EV alternatives for consumers that are car reliant. But, again, people are often willing to pay a bit more for a slightly greener option.
As to Honda and the EV market, they are working on designing their own. If they’ll reach their targets remains to be seen. However, they intend to have their EVs cost less than what is currently available to buyers.
7. High Resell Value Of Honda’s Keeps Prices High
Honda’s high resell value makes people more comfortable paying higher prices. Customers are confident when they trade it in or decide to sell it; they’ll receive back a decent chunk of the original purchase price.
For example, they won the first and second spots in the 2022 Kelly Blue Book Awards in the car category for the Civic and the Accord. They also won Best Brand in the 2021 Kelly Blue Book Awards. It just goes on and on. In 2019, five Honda models won top accolades in the Kelly Blue Book Awards.
In addition, the second-hand market has spiked due to the supply chain. Thus, while Hondas are currently eyewatering for first-time buyers, if you already own one in good condition, the trade-in helps considerably easing the financial pain.
But, of course, the bad news is that quality second-hand cars are no longer huge savings.
Worse for second-hand buyers, according to Forbes, some cars are worth more in late 2022 than they were when bought brand new three years ago. No, Honda isn’t one of these.
However, on the list of cars that have depreciated, the Civic is second least, with only a 1.4% drop. The car beating it is the Mercedes-Benz G-Class, a significantly more expensive model.