A NEW index aims to provide fleet and motor industry decision-makers with a more accurate guide to European new car prices than the controversial European Commission survey.

The Credit Suisse First Boston Base Price New Car Price index, compiled by eurocarprice.com, promises to offer a more sophisticated monthly analysis than the EC's half-yearly pre-tax price comparison.

The index covers 19 European countries and is based on more than 2,000 vehicles, weighted according to their specification and sales volumes.

The first index reveals the sharp difference between the pre-tax prices charged by car manufacturers and the retail price paid by new car buyers.

For example, sample figures cited by Rick Yarrow, managing director of Automotive Directions (the company behind europrice.com) show that a Volkswagen Golf five-door hatchback 'Comfortline' costs before tax €14,898 in Germany, €13,060 in the Netherlands and €19,468 in the UK. Fleets would then have to pay 16% tax on this base price in Germany, 49.3% in the Netherlands, and 17.5% in the UK. As a result, the respective list prices of the same car are €17,282 in Germany, €19,503 in the Netherlands, and €22,875 in the UK. 'So the German consumer could save 12% and the UK consumer 33% by buying the car in the Netherlands,' said Yarrow. 'This is because tax is payable in the country of use, irrespective of the point of vehicle purchase.'

This example confirms the general rule that European Union member states with relatively cheap pre-tax prices, like the Netherlands and Portugal, have expensive retail prices, while states with high pre-tax prices like Germany and Switzerland have relatively low retail prices.

Spain and Italy appear to be the exceptions, both enjoying the benefits of below average pre-tax prices and a low tax regime to create below average retail prices. The CSFB index also highlights the significant segment variations in retail prices across Europe. Italy, for instance, has below average prices for mini and small and lower medium sized cars, the domain of its domestic manufacturer Fiat, but above average prices for executive and luxury cars. On the other hand Sweden, the home of Saab and Volvo, has below average prices for executive cars, but exceeds the European average in every other sector.

The CSFB New Car Price Index is produced by Automotive Directions in association with PricewaterhouseCoopers, JATO Dynamics, and the Centre for Automotive Industries Management at Nottingham Business School. For details, email contact@eurocarprice.com (August 2000)