Car Prices Creep Up In Spite Of Slow Sales

Sales of new cars have fallen compared with this time last year, but the What Car? Price Index reveals that new car prices are on the up.

There was a 12.6% drop in the number of new cars sold during April 2005, compared with April 2004, yet the price of new cars went up by 2.9%.

According to this month’s What Car? Price Index, price rises have affected all but two categories of car, with the biggest increases on compact executive models and small family cars.

Buyers of compact executive cars have to stump up an average of 5% more than they did a year ago. That’s an increase of 4% in the past month alone. Small family cars are not far behind with a 4% increase in price compared with this time last year. However, there are signs that this upward spiral will not continue as there is a small, but possibly significant, 0.1% drop on last month’s price.

By contrast nearly new (one-year-old) and used (three-year-old) cars can be picked up at bargain prices. One-year-old models now cost 4.7% less than they did a year ago and three-year-old cars are now 5.5% cheaper overall.

The biggest price slide was on nearly new 4x4s, which are now 11.6% less than they were this time last year. Off-roaders have also had the most dramatic fall in value in the used car category, with 9.4% less money changing hands for three-year-old examples than during April 2004. Nearly new MPVs are also looking good value again this month with values dropping by 10.9% year on year. Used MPV prices have also dropped, but by a smaller 4.1%.

Commenting on the new figures, What Car?’s editor, David Motton, said: ‘I’d be surprised if these price rises continue. Times are tough in showrooms, and salesmen will have to start offering more generous discounts to persuade car buyers that now is the right time to buy.

‘On the other hand used-car buyers can hardly go wrong - there are bargains to be had whatever class of car you’re shopping for.’