Just 5% separates the price of a typical new car in the UK with the average price in Europe, compared to 35% three years ago. But the latest European Index of New Car Prices, published by eurocarprice.com in association with accountants PricewaterhouseCoopers, claims it is currency fluctuations, not the Government's campaign to bring down car prices, that has made the most difference.
The stronger Euro is the key to making the UK seem relatively less expensive. For example, the study found that models such as the Volkswagen Golf and the Toyota Corolla, which used to cost about a third more in the UK than in Holland are now cheaper to buy in Britain, while a Ford Focus is now almost the same price as in Holland. In terms of pre-tax pricing, Dutch prices are among the lowest because taxes there are high.
It used to be the case that UK buyers willing to purchase a car in Holland and pay the lower UK tax could achieve significant savings, but this has diminished dramatically. The report's authors said: 'If UK tax-payers imported a Toyota three years ago, they could have saved about £5,900 compared to a UK purchase after paying VAT (but not including the cost of arranging the importation).
'Today, the saving would be only about £2,600, although the extra costs and potential delays involved in arranging a personal import are the same as three years ago.' Ironically, the Euro shows no signs of creating the hoped-for level playing field in car prices among the Euro currency countries. Variations in new car prices remain as wide as ever on the Continent, it adds.
Eurocarprice.com managing director Rick Yarrow said: 'Car price differentials in Europe are caused mainly by the amount of tax levied by each country. There cannot be a truly competitive market for cars in Europe until Governments face up to the issue of harmonising taxes.'
UK prices rise 2%
AVERAGE retail prices for new cars in the UK rose by 2% over the 12 months to January 2003, according to the latest European index of new car prices.
The movement in retail prices in the UK was lower than across Europe as a whole, where retail prices rose by an average of 4.4% in the year to January. This is in keeping with the trend for new car prices in the UK to rise more slowly, or even fall, compared to other European countries.
Yarrow said: 'Since the Government made manufacturers reduce prices in 2000, the average pre-tax price of a car has fallen by 30%. In 2000, you could import a car from The Netherlands and save up to 50% before tax. Today, the saving would typically be nearer to 20%.' The index focused on 19 countries and found that Poland experienced the greatest increase in retail prices, rising by 9.5% last year. In the Czech Republic, retail prices fell by 0.8%.