THE extent of the Government's uphill battle to curb car use is thrown into stark relief by new statistics that show new cars are now almost one-third cheaper in real terms than in 1998.

The Alliance & Leicester Car Price Index has tracked the price of new cars against average weekly earnings in the UK, and found that new cars cost 30.2% less today than in June 1998.

Four years ago it took 33 weeks for someone on average earnings (£374 per week) to pay for a typical car (a £12,295 Peugeot 306). Today the relevant figures are earnings of £457 per week, a rise of 22.2%, while the typical car used by the survey is a Renault Megane costing £10,500 – equivalent to 23 weeks' salary.

Douglas McWilliams of the Centre for Economics and Business Research said: 'The increasing affordability of cars is no doubt one of the reasons why car sales remain buoyant.

'Overall consumer spending growth now seems to be slowing and it is possible that this will push car prices down further in the coming months.'

The latest figures from Alliance & Leicester indicate that new car prices fell for the fifth consecutive month in April, down 2.5% year-on-year with April 2001, while the value of three years old used cars fell by 9.8% year-on-year. The prices of one-year old nearly new cars were 6.2% lower year-on-year.

Only luxury cars, such as the Mercedes-Benz S-class and BMW 7-series have bucked this downward trend, achieving a 2.7% price rise, while the prices of compact executive models such as the Audi A4 and BMW 3-series have remained static.