Eurocarprice.com's latest European New Car Price Index report warns that the cost of new cars in the UK is likely to rise significantly in the next few months. The latest report, published in association with PricewaterhouseCoopers, shows that the retail price of the average new car sold in the UK rose by 2.5% over the 12 months to July 2003. The corresponding increase for new car prices in the Euro currency zone was 4.4%.

However, eurocarprice.com says the average UK price rise has been more than offset by the revenue reduction suffered by the manufacturers in the UK car market, formerly the EU's 'Eldorado', as a result of the 10% fall of the pound against the euro for the same period.

Robin Goodyer, operations director of eurocarprice.com, said: “Low prices and cheap deals are now costing many of the car manufacturers dearly, causing some of them to reconsider their pricing strategies. No-one wants to be the first to put their prices up but it cannot be long before one manufacturer takes the plunge, and then the others will follow. We expect prices to rise in October as the new Model Year vehicles come on stream after the peak sales month of September.”

Charles Seguin, leader of PricewaterhouseCoopers AUTOFACTS Retailer Capabilities Division, said: “Official statistics on household spending1 show a shift towards used car buying. Record sales of new cars over the past few years have increased the supply of used vehicles into the market. This, coupled with improvements to vehicle quality, offers a good value proposition for the used car buyer in the UK.”