THE gap between new car prices across Europe is narrowing although there are still significant differences for some models, a new European Commission study has found.

Germany and Austria have the most expensive pre-tax prices for new cars, while Finland has the cheapest.

The EC found that the overall deviation of price across the EU fell from 6.9% to 6.4% in the six months to November 1, 2004.

A total of 18 European and eight Japanese manufacturers supplied the EC with their recommended retail prices. The study found that the widest price difference is for the Opel Astra, which is one of the EU's top 10 best-selling cars.

Its pre-tax price is almost 50% more in Germany than in Denmark, although VAT is much higher in Denmark.

But it potentially means that a fleet in Germany can import a car from Denmark and make a saving of £3,700.

A spokesman said: 'Price differences for particular models between the cheapest and most expensive member states can still be substantial.'

In Germany, 38 models out of 91 in the study are sold at the highest euro zone prices and 21 of these are 20% more expensive than in the cheapest national market within the euro zone.

Greece and Finland were found to be the cheapest markets within the euro-zone and Estonia replaced Poland as the cheapest market in the EU, with prices 2.5% below Greece.