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VAT rise hides numerous manufacturer list price increases

New car list prices were increased by two in three manufacturers in January in addition to the 2.5% VAT increase, reports CAP.

CAP's database revealed two thirds of carmakers increased basic list prices by more than the additional VAT figure, raising average prices by £142.74.

However one third of manufacturers have decreased their basic list prices by an average of £108.73.

New vehicle data manager David Saville said: “Historically, tax-driven changes to car manufacturer price lists have often been used as an opportunity by manufacturers to realign their ranges and push through additional price increases.

“The latest change to 20% VAT in January was no exception." 

“When the additional 2.5% of VAT is applied, this represents an average new price increase of £79.57.

European manufacturers have applied the heaviest increases, whereas Japanese and Korean manufacturers have made minimal adjustments averaging around £10.

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