Several carmakers have announced they are passing on the cut in VAT to their customers.
Savings can now be had on a range of BMW and MINI, MG and Perodua vehicles.
It means drivers can buy a BMW 1 Series three door 116i for £15,990, which is £880 less than the original on the road price.
A saving of £245 can be had on a MINI One with the reduction applying to most BMW and Mini models.
An MG TF LE 500 now has a list price of £16,055 while the Perodua Myvi SXi manual can be snapped up for £6,599.
The 2.5% reduction will apply to the vehicles until December 31, 2009.