The year-on-year average European new car price has risen for the first time since 2000, whilst UK prices have also seen a sharp rise of 5.4 % over the last 12 months, according to the PricewaterhouseCoopers and eurocarprice.com Index of New Car Prices.

The index shows that average retail new car prices in the UK last month were 4% higher than the average for western Europe and 6% higher than the average for the euro currency zone as a whole.

The strongest movement in retail car prices was in Denmark where prices rose by 7.9% during the 12 months to June. The weakest price movement was in Hungary where retail prices decreased by 1.8%.

Generally across Europe, the average retail car price rise for the twelve months to June 30, 2004 was greater than the year-on-year rise to June 2003, as car prices on the whole rise more quickly.

The average pre-tax price of cars in the UK (converted to euros) rose 3.1% in the 12 months to June. Pre-tax prices in the UK are 9% higher than the average for western Europe and 11% higher than the average for the euro currency zone. Pre-tax car prices in the whole of western Europe rose by 1.9% in the year to June.

Shaun Pitt, automotive partner, PricewaterhouseCoopers says: “There is increasing evidence that pre-tax car prices are harmonising within the eurozone. However, vastly differing national tax regimes continue to inhibit convergence of tax-included retail prices. Outside euroland, exchange rate movements prevent any possibility of price harmonisation at either pre- or post-tax levels.”

The lower medium segment of the market showed the largest increase in average pre-tax prices in Western Europe during the 12 months to June: 9.6%. The weakest segment was the Sport Coupe segment, where prices rose by 1.7%.

Average price movements in the main volume segments were:

Small - 4%
Lower medium - 9.6%
Upper medium - 5.1%
Executive - 8.4%

Robin Goodyer, operations director of eurocarprice.com, says: “The increase in manufacturers' pre-tax prices last month was the largest since eurocarprice.com began monitoring prices in 1998.

"Three factors are fuelling the price rise: higher sales of more expensive multi passenger vehicles (MPVs) and Sport Utility Vehicles (SUVs); pricier new models in the volume segments and the carmakers' need to compensate for falling revenue while the German and French car markets continue to decline.”