It will be an electric car that delivers on all of Renault’s promises. The diamond brand will reintroduce its popular R5 from 2024. The city car was unveiled at the latest Paris motor show and is set to spearhead Renault’s resolutely electric new strategy, unveiled on Tuesday. Built in Douai (Nord), the new R5 will replace the Twingo and Zoé as its entry-level car. With this, Renault reactivates the symbol. In the transition to the electric car, the small city car, which is simple and cheap, is synonymous with high prices and is therefore out of reach for most French people.
Its predecessor, launched 50 years ago, was the best-selling car in France for a long time in the late 1970s and 1980s, a period already marked by record inflation after the oil shocks. But as the end of thermal cars approaches, will the electric R5 live up to those affordability promises? To try to get an idea, Marianne offers you some indicative calculations comparing the price of the old and the next R5.
A new one will cost twice as much
In 1973 the basic Renault 5 is 11,000 francs, According to an enthusiast-run site that religiously charts the evolution of car prices and equipment. Later, the city car was delivered in a 3-door version with a folding rear seat and optional leather upholstery. How much is that 11,000 francs today? Well, they are equivalent to a purchasing power of 10,188 euros according to the INSEE converter (National Institute of Statistics and Economic Research), allows to take into account inflation and monetary erosion caused by the switch from the franc to the euro.
At its planned launch in 2024, the bill for the electric R5 should be higher. According to Argus magazine, a specialist in the automotive field, it should cost around 24,000 euros. Therefore, the new Renault 5 will be twice as expensive as its predecessor (exactly 136% increase).
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Therefore, paying it will be more painful than it was in the 1970s. In 1973, the net hourly minimum wage was only 4.95 francs. So Smicard won about 881 francs a month – assuming that the laborer works on average 44.5 hours per week according to the report published by INSEE. The worker was making minimum wage, so he had to pay a year’s salary to be able to buy a brand new Renault 5 for 11,000 francs.
As proof that it’s cheaper in 2024, an employee paying Smic would have to pay around 17 months’ wages to buy a new R5 electric for €24,000, 5 months more*. Looking at the rest of the salary grid, the comparison becomes even more stark. Thus, in 1973, an average worker was paid 1,484 francs per month. Thus, R5 was equal to 7 and a half months’ salary for him, and 6 months for the average worker. To buy a new R5, you need an average of one year’s salary (more than 4 and a half months) and 9 months of average salary (more than 3 months) for an employee.
According to our calculations, the lower the wages, the higher the increase. This shows that the purchasing power of the most modest relative to buying a car has declined over fifty years. Digging into old INSEE research, it is also surprising to note that in 1973, in a period of already high inflation, workers’ wages grew faster than executives’ wages. Thus, the average wages of unskilled workers more than doubled in 1973 (14.5% versus 8.3% in the same period).
Today’s equivalent of the old R5 in terms of affordability will be the Twingo, which will be phased out in 2024. According to the Renault website, the price of Twingo in the basic version is 15,750 euros. This represents eleven months of wages, six months of average wages and eight and a half months of average wages for Smicard. That’s about the time it took to buy the iconic Renault 5 circa 1973.
Why is there such a difference?
First, it should be noted that the equipment of the two cars is not completely comparable, and safety standards must also be observed, which, according to this study, mechanically increases the production costs of the vehicles, which account for about 80% of the final price. Reported by Bloomberg. Then there are the additional costs associated with electric cars, which are on average 25-35% more expensive than their thermal cousins. This difference is mainly due to the still high cost of batteries.
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For years, the auto industry hoped that their costs would gradually decrease as production increased. In 2021, Bloomberg research expected so “An optimally designed, mass-produced electric car could become cheaper by a third time in 2025”. Bloomberg estimates that in three years, the price of an electric city car could match the price of a thermal equivalent, and even drop by the end of the decade.
Despite everything, prices are still high, especially due to shortages of certain raw materials such as lithium or components such as semiconductors. Moreover, the growing demand of wealthy buyers does not encourage car manufacturers to produce cheaper models. So, in parallel with the R5, Renault is committed to the production of the new 4L, which will only retain the name of the original. It will indeed be an SUV, the price of which has not been disclosed, but it should be more salty.
Will the R5 be so unaffordable?
I’m not so sure. First, it should be noted that the R5 should be 40% cheaper than the electric car Zoe currently sold by Renault (25,700 copies last year). In addition, there is government aid to try to offset the price difference between heat and electric cars.
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Subject to income conditions, a conversion allowance of €5,000 can be paid for the purchase of an electric vehicle. Assistance that can be combined with an environmental bonus of up to 7,000 euros for the most modest families. The government also promises that it will be possible to rent an electric car for 100 euros per month.
*To make this calculation, we tried to estimate the amount of the net minimum wage in 2024. To do this, we take into account that the government has forecast inflation of 6% over the next two years, which we apply to the monthly Smic. current net indexed to inflation.