The EC's latest car price comparisons show continuing convergence, but differentials between low-pre-tax price markets Denmark, Greece and Finland and Germany, Europe's biggest and most expensive market, are still considerable.

The UK is now the cheapest market for 15 of the 82 models surveyed in the six-monthly EC report. (Nine models surveyed by the EC are not available in the UK.) Four years ago, the UK was highlighted as the most expensive market for almost all models under the spotlight. Christopher Macgowan SMMT chief executive commented, “Clearly there has been a massive drop in the price of new cars in the last four years and this is very good news for buyers. In both absolute terms and in relation to our European neighbours the fact is that we are more competitive than ever. Three consecutive record years and healthy showroom traffic are testament to this fact.”

The SMMT noted that new car prices have stabilised partly as a result of currency fluctuations. At the start of the millennium the UK suffered as sterling's strength kept prices higher in relative terms than many other markets. However, the pound has since depreciated by around 15%.

The report shows that for British and Irish consumers buying a car in another Member State, the supplement for right-hand drive specification is generally the lowest for Land Rover, Rover and Volvo cars (less than 3%), and the highest (9% or more) for the models produced by the VW group.

EU Competition Commissioner Monti commented that “European consumers still can make good deals when buying abroad but I see clearly signs of more integrated markets especially in the euro area. " Monti added, "I am satisfied that this convergence is proceeding smoothly: unlike the predictions made by some in the industry, consumers in Member States with high taxes on car purchase do not seem on average to suffer from the new block exemption Regulation as far as prices are concerned."

This latest pricing report is the first released since the transition period for the application of the new regulation on motor vehicle distribution (Regulation 1400/2002) ended. The EC notes that the full effect of the new block exemption for car distribution will only be felt as of 1 October 2005, when dealers' right to set up shop wherever they please across the EU is expected to stimulate further market integration and price convergence.

The full EC car price report can be downloaded from: http://europa.eu.int/comm/competition/car_sector/