In the euro zone, pre-tax prices are generally lowest in Finland and most expensive in Germany.
Looking at the EU as a whole, cars are less expensive on average in the new member states, with Estonia being the cheapest market.
Competition commissioner Neelie Kroes says: "Price convergence for cars continues to improve in the EU as a whole, while the integration of the new member states is progressing. I am confident that the new legal framework for car distribution and strict enforcement of EU competition rules will contribute to further price convergance by removing obstacles to parallel imports throughout the EU."
The Commission has introduced a new block exemption regulation applying EU competition rules to the motor vehicle sector and has taken several cases against car manufacturers who were limiting parallel imports of cars across internal EU borders.
Although the figures show that the situation is improving, more work needs to be done and rigorous enforcement action will continue.
Price differences, based on November 1, 2004 figures, are smaller than those recorded in May 2004, with the average standard differences in prices between the 25 national markets falling from 6.9% to 6.4 %.
New member states account for two thirds of this convergence, while dispersion remains low at the euro-zone as in previous level.
But price differences for particular models between the cheapest and most expensive member states can still be substantial.
Of the 1,909 prices quoted in the report, 598 exceed by more than 20% the cheapest market in the EU.
The widest price difference is for the Opel Astra, one of the 10 top best selling cars in EU in 2004, which costs almost 50% more in Germany than in Denmark. This difference represents a potential saving of €3,700 (£2,548) for German buyers, including VAT, buying in Denmark.
Germany continues to be the more expensive markets in the EU for the models surveyed.
In Germany, 38 models out of 91 in the report are sold to consumers at the highest prices in the euro zone, and 21 of these are 20% more expensive than in the cheapest national market within the euro zone.
Within the euro zone, Greece and Finland are cheapest. Outside the euro zone, Estonia has replaced Poland as the cheapest market in the EU with prices 2.5% below Greece.
Compared with the end 2003, car prices at the end of 2004 had increased by 0.5% in the EU. Inflation amounted to 2.4% over the same period.
Car prices decreased in Germany (-0.1%), the UK (-1.2%) and the Czech Republic (-6 %). Prices increased, though at a very moderate pace, in France (+1.1 %) and Italy (+0.8 %).
Member states with traditionally low pre-tax prices generally did not experience significant increases in consumer price for cars, except in Poland (+7.4 %).
Prices increased somewhat in Denmark (+1.6 %) and Greece (+2.2 %), whereas they decreased in Finland (-1.7 %), in Estonia (-8.4 %) and in Lithuania (-2.8 %).