ITALY has the lowest pre-tax new car prices in Europe – but the UK now comes second, a new survey has revealed.

It suggests UK dealers will benefit from stronger domestic demand as importing a car is an expensive option.

The base price index survey, part of research carried out by eurocarprice.com for PricewaterhouseCoopers and its Autofacts Retailer Capabilities Division, compares car prices in 19 countries against the average price of a new car in the euro currency zone.

Last month, another eurocarprice.com study – on retail prices – first suggested the financial benefits of importing new cars into the UK from Europe had been wiped out (Fleet News Europe, May 22).

The latest research also shows that UK pre-tax prices are now actually 7% below the average in Germany.

Charles Seguin, leader of Autofacts Retailer Capabilities Division at PricewaterhouseCoopers, said: 'Continental suppliers now find it very hard to undercut UK car dealers' prices. With May's new car registrations the second highest on record and buoyant industry forecasts for the remainder of the year, the short-term prospects look bright for UK retailers.

'The result of the weaker pound versus the euro has significantly reduced the revenues to manufacturers of cars sold in the UK. Overall, the poor profitability of all manufacturers will increase pressures for price rises in this country. In the meantime, UK consumers are the winners with car prices in real terms lower than they have been for many years.'

Robin Goodyer, operations director of eurocarprice.com, said: 'UK dealers can now offer cars in Europe at more competitive pre-tax prices. However, most other countries impose higher taxes on new cars than the UK, so it is still unlikely that prices here will fall low enough to justify such trade.'

The table below shows the percentage movements in pre-tax retail prices of new cars by country over the 12 months to May and during the past month. It also shows the relative position of countries compared to Index 100 (the European average).

Residual values analysis
Country Eurocarprice.com Monthly Annual
Base price index Movement Movement
Greece: 86 - +2.2%
Denmark: 87 +3% NA
Portugal: 93 - +1.5%
Netherlands: 94 - +1.5%
Spain: 95 - +3.4%
Norway: 96 -1% NA
Italy: 96 - +2.4%
Sweden: 99 +1% +2.4%
France: 99 +1% +2.4%
Great Britain: 100 -4% +1.1%
Belgium: 100 +1% +3.3%
Austria 103 -1% +2.4%
Germany 107 - +0.2%