New car prices driven down 14%

NEW cars in Britain are much cheaper than at any time over the last five years, it was revealed today. Hundreds of new models cost about 14% less than in 1998.

The upmarket BMW 5 Series costs £25,645 compared to £28,906 five years ago - a saving of £3,261 (more than 11%). At the other end of the scale the Fiat Punto is now £8,014 compared with £9,205 in 1998.

Motoring experts today hailed the price cuts as a triumph for 'consumer power' - but warned that the falls would hit drivers trying to sell used cars.

Prices of new models began tumbling following a damning Competition Commission investigation in spring 2000. In some cases, pre-tax prices were twice as high in Britain as in other parts of Europe.

The commission said manufacturers saw Britain as a 'treasure island' where they could demand high prices. The Government ordered car firms to slash prices by 10, which they did by the end of the year.

According to Alliance and Leicester and What Car? magazine, which published today's figures, thousands of buyers stayed away from showrooms after being alerted to high prices and many made huge savings by importing new models, applying further pressure on car manufacturers.

Alliance and Leicester said an explosion of internet sales also forced firms to rethink prices. It said that in August the year-on-year price of new cars fell by 2% - the largest monthly fall since September 2002.

Richard Freeman of the AA said today: 'This is good news for new car buyers and demonstrates consumer power. It is also a result, however, of over-capacity in the motor industry. If you make too much of a product, whatever that product is, prices tend to fall, and that is what is happening in Europe.

'The bad news is that the lower prices filter down to the used market. If you are trying to sell a used car, you will get less, although this will even out eventually.'