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Monday, 23 July, 2001, 12:53 GMT 13:53 UK
EU: Cars cost most in the UK
Graphic of car prices in the UK
A new report from the European Commission shows that British motorists are still paying significantly more for their cars than their European neighbours.

In the worst case scenario, certain cars are 60% more expensive in the UK than elsewhere.

Price differential compared to UK (pre-tax, May)
Fiat Bravo
3,806 cheaper in Denmark

Ford Focus Ghia 5,250 cheaper in Belgium

Megane Scenic 4,300 cheaper in Holland
A Fiat Bravo is 3,806 cheaper in Denmark, a Ford Focus Ghia is 5,250 cheaper in Belgium and a Megane Scenic costs 4,300 less in Holland.

But car makers and dealers say that the pre-tax price comparisons are not fair and that prices have fallen.

And the EU acknowledges, that while UK prices are still often higher than the rest of Europe, prices have come down by 5% since November last year.

Rigged market?

Fifteen months ago, the EU investigation found the price paid by UK consumers for cars was on average 10% too high.

The EU may not be comparing apples with apples

Land Rover spokesman
That was in the midst of the "rip-off Britain" campaign, and the UK government stepped in and ordered the industry to do something about the inflated prices.

Since then, car prices have fallen steadily, with car sellers claiming that the rip-off era is over.

But Monday's report shows that price discrepancies still exist.

The Consumers' Association has called for a radical overhaul of the existing rules of selling cars which, it claims, are rigged in the interest of car makers.

Falling prices?

The EU's survey compared the prices of 81 models from more than 25 of the largest car manufacturers.

The UK was the most expensive place to buy a car for 52 out of the 81 models tested in the study.

The pre-tax price of a Mazda 323
10,525 in the UK
7,404 in Greece
6,266 in Denmark
The report shows that even cars assembled in the UK and made from parts purchased more cheaply in mainland Europe carry a higher price tag in the UK.

The best buys in the UK were cars made by the German manufacturers BMW, Audi and Mercedes, where prices were as little as 2% higher than in mainland Europe.

The pre-tax price of a Fiat Marea
9,197 in the UK
5,752 in Greece
5,583 in Denmark
But the Land Rover Discovery was 27% more expensive in the UK than elsewhere in Europe while the Rover MGF sportscar was 40% higher.

"The EU may not be comparing apples with apples," a spokesman for Land Rover told BBC News Online when asked about the price differential.

Car industry hits back

The industry hit back at the survey, pointing out that car prices fell 10% during the past year.

And an independent survey by the Alliance and Leicester upheld that the price of a new car in Britain fell by more than 12% in 2000.

Difference in price between the best and the worst deal in EU (pre-tax, May)
Opel Vectra 49%
VW Golf 33%
Renault Clio 31%
Ford Focus 19%
Audi 14%
BMW 13%
The car industry says that the EU is quoting pre-tax prices, and that the report was not a fair reflection of the prices actually being paid by consumers. In Denmark, for example, VAT can account for two thirds of the total cost of the car, while VAT usually makes up about one fifth of the total cost of the car in the UK.

With lower taxes on new cars in the UK than in other European countries, the differential between the end price charged to consumers is narrowed when tax is included.

"We are completely stuffed on this issue," Christopher MacGowan from the Society of Motor Manufacturers and Traders told the BBC, explaining that countries such as Finland, Greece and Denmark can add up to 200% tax on to the price of cars.

The car industry also says that Britain's need for right-hand drive cars can push the price of cars higher in the UK.

And it says that the listed prices include a mark-up of up to 10% because consumers enjoy the 'haggle factor' - negotiating for a better deal with the salesman.

Consumer anger

The uproar over car prices may put pressure on the government to take more concrete action.

Many consumers have been voting with their feet by importing their car from mainland Europe in order to get a better deal.

UK prices have fallen but we accept that they have to fall further

Department of Trade and Industry
The Department of Trade and Industry agrees that prices have fallen, but says it wants prices to come down further.

And a spokesman confirmed that the DTI was working with the EC to make sure that prices do fall.

And the EC is keeping a watchful eye on the situation.

"The monitoring of both new car price differentials and possible obstacles to parallel trade in new cars remain a high priority for the Commission," said EU Competition Commissioner Mario Monti.

And the Commission noted that it still receives complaints from British consumers who encounter obstacles when purchasing a car in another member state.

The BBC's Karen Hoggan reports
"Car prices are supposed to be falling"
The BBC's Max Foster
"We are paying up to 60% more than others in Europe"
Motoring journalist Quentin Wilson
"British consumers are subsidising the European market"
See also:

23 Jul 01 | Business
Q&A: Buying a new car
23 Feb 01 | Business
Buying cars on the web
23 Jul 01 | Business
Q&A: 'Rip-off' car prices
30 May 01 | Business
Cheaper cars drive higher sales
08 Apr 01 | Business
UK car sales set for 'record year'
25 May 01 | Business
What drives car insurance higher?
25 Feb 01 | Business
Your say: buying cars online
01 Sep 00 | Business
Car price law in force
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