The average new car price in the UK has dropped from one of the highest to the second lowest in Europe. The European New Car Price Index report from europricecheck.com (released last week) showed that UK pre-tax prices have dropped seven per cent below that of Germany.
The Society of Motor Manufacturers and Traders believe that exchange rate fluctuations across Europe is the key reason for this change. Currently the euro is continuing to strengthen against the pound, reducing UK prices when converting into euro. The UK has subsequently fallen into the second lowest spot.
SMMT, however, expect price comparisons based on euros to be variable for years to come as the euro and pound alter in strength. The euro’s launch saw it depreciate in value against the pound and the US dollar. However, since the latter part of 2002 it has appreciated consistently against both currencies. Since 1999 UK car prices have been falling, following the competition commission’s request for list prices to be cut by 10 per cent. Until recently these cuts had been masked by a weakening euro.
International comparisons are rarely straightforward as there are many other key factors to be taken into account, including tax rates and vehicle specifications. SMMT has consistently stressed the important roles of these variations when making comparisons.