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Transaction prices continue to fall

The latest figures released today from the Alliance & Leicester Car Price Index, produced in association with What Car?, reveal more reductions in forecourt transaction prices this year.

On top of January 2001's massive 9.4% year-on-year fall in transaction prices, January 2002 showed a further drop of 2.7%. This keeps prices in line with the Competition Commission's recommendation in May 2000 that new car prices in the UK should come down by an average of 10%, bringing them closer to those paid in mainland Europe.

The year-on-year fall of 2.7% this month contrasts sharply with the relatively slight average fall of 1.3% over the previous three months.

Values for nearly new (one year old) and used cars (three years old) also fell, dropping 1.8% and 2.3% year-on-year respectively compared with 4.1% and 5.7% in December 2001.

Andy Bayes, for Alliance & Leicester, said: “The continuing fall in new car prices recorded by the Index is more great news for UK consumers. When you view this month's fall in conjunction with the enormous drop 12 months earlier in January 2001 it is clear that there are superb bargains to be had.”


The Alliance & Leicester Car Price Index shows that new car prices fell by 2.7% year-on-year in January 2002 compared to a 0.2% fall in December 2001. Small cars demonstrated the largest fall in the category (down 7.5%) with Compact Executives, Executives and Luxury Cars showing rises in price.

Douglas McWilliams of the Centre for Economics and Business Research said: “It is too early to tell if this latest drop in new car prices is a trend that will continue. However, most commentators expect that disposable income will be squeezed this year and the fall in new car prices will be reflected in reduced inflationary pressures. “

Steve Fowler, editor of What Car? added: “It's clear from the Index that dealers are still working very hard to tempt car buyers to part with their cash. Consumer spending may have been on a downward path in January, but excellent new car sales show that customers will still buy a car when they see a great deal – and there are some great deals available.”


Values in the nearly new car market saw a smaller fall in January than new cars with the Alliance & Leicester Car Price Index showing a 1.8% year-on-year fall compared to a much larger 4.1% drop in December. The nearly new category saw a variety of rises and falls: City Cars, Small Cars and Luxury Cars rose in value whilst Superminis, Family Cars, MPVs, Compact Executives and Executives fell in value. The rise in value demonstrated by Luxury Cars was the eighth consecutive increase shown by the Index.


Values for used cars also fell, with the Car Price Index demonstrating a year-on-year fall of 2.3% compared with a 5.7% fall in December. Only City Cars and Luxury Cars recorded an increase in value rising 4.2% and 0.1% respectively.

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