New Car Prices Are Rising At A Slower Rate, Reports Glass's

February sees new car prices up, on average, by 2.4 per cent, year-on-year

According to the latest New Car Market Trends report from the Glass’s Market Intelligence Service, the price of the average* new car rose once again last month – up 2.4 per cent year-on-year at the start of February, equivalent to an increase of £311. However, the rate at which prices have risen has eased back, potentially indicative of how vehicle manufacturers are responding to the recent fall in consumer demand for new cars.

Looking at last month in isolation, prices rose by just 0.3 per cent, less than half of the 0.8 per cent increase reported in January 2004 and well down on the 0.5 per cent rise in January 2003. The first few months of each year are often favoured by vehicle manufacturers for introducing list price increases, making the relatively modest price rise last month all the more noteworthy.

Manufacturers still need to decide whether to absorb the sharp rise in steel and energy costs. "We not rule out the possibility of an acceleration in list price increases over the coming months," explains Adrian Rushmore, Managing editor at Glass’s. "If the new car market contracts further, these costs are unlikely to be passed on to the consumer."

What types of car are getting more expensive?

The biggest price rises are once again to be found in the compact family hatchback segment (Ford Focus, Vauxhall Astra, Renault Mégane, etc). According to the February New Car Market Trends report from the Glass’s Market Intelligence Service, the price of the average car in this sector has gone up by 4 per cent, year-on-year.

Other vehicle segments to see above average price rises include large MPVs, up 3.6 per cent, and upper-medium family hatchbacks and saloons (Toyota Avensis, Ford Mondeo, Vauxhall Vectra, etc), up 3.3 per cent.

Prices of Sports Utility Vehicles (SUVs) are up 2.9 per cent, year-on-year, while compact MPVs are up 2.8 per cent.

There were well below average price rises in the supermini market - up only 0.1 per cent, year-on-year. "Given that a large proportion of supermini sales are to consumers, and that consumer demand for new cars is currently faltering, it is inevitable that manufacturers are limiting price rises that could further curtail supermini sales," explains Rushmore.

Interestingly, list price rises are less evident among the prestige brands. New car prices in the compact executive sector (BMW 3 Series, Audi A4, Mercedes C-Class, etc) have remained static, year-on-year, while in the large executive sector (BMW 5 Series, Mercedes E-Class, etc) prices have actually fallen by 0.5 per cent. "Competition within the prestige sector has become particularly intense over the past 12 months, and this is forcing many of the leading manufacturers to hold back on any price increases that may have a negative impact on their growing market share," suggests Rushmore.

The biggest list price changes

In pound-note terms, the single largest upwards price rise in January 2005 was for the Mercedes-Benz S-Class S65 AMG limousine, which increased by £1,760. At the other end of the spectrum, the biggest price reduction was for VW’s Passat Trendline range, which fell by £1,000.

9 February 2005 Staff

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