British car prices dearest in Europe

Britain has gone from being cheapest place in the EU to buy a car to the most expensive, in the space of just 12 months, according to research to be published later this month by the European Commission

Despite its uninspiring title, the Commission's Report on Car Prices has become the bible for consumers who are prepared to travel to Belgium, Spain or Portugal to save up to 30 per cent on UK listed prices. In the process, many have to put up with a plethora of paperwork and occasional obstruction from manufacturers and dealers who are anxious to play down any price differences.

The report will show that the UK is the most expensive EU country for 38 out of 50 popular models and the highest priced since the survey began in 1992. Portugal maintains its position as the one of the cheapest, whereas last year it was neck and neck with the UK. In France, customers can take advantage of an unprecedented price war following a disastrous slump in sales in 1996.

The survey began in 1992 after complaints that manufacturers were obstructing buyers from ordering cars abroad. Under European law, UK consumers can order right-hand drive cars on the continent.

Behind the UK's turnaround is the 20 per cent rise in the value of the pound, a source of delight to tourists abroad and despair to exporters faced with collapsing profit margins. Last week, sterling nudged 10 francs on the money markets for the first time since 1991 and is fast approaching 3 Deutschmarks.

The EC report shows a big price gap between the most expensive and cheapest countries. Typically, buyers prepared personally to import their car can save up to 30 per cent on a "supermini" or medium-sized hatchback.

The comparisons in the table do not tell the full story, because they include local taxes which vary widely. Under a tax anomaly, consumers can buy cars in any country free of local taxes and instead pay taxes wherever the vehicle is registered.

It means British buyers get a double benefit, enjoying low prices abroad coupled with some of the lowest car taxes in the UK of any EU country. The Portuguese prices, for instance, would be cheaper still if local taxes were excluded, while luxury cars in Portugal are taxed to virtual extinction. Against the savings, customers have to offset the cost of changing sterling into a foreign currency and the sheer hassle of buying abroad.

James Rosenstein, of European Automakers, the industry association, said the figures were another plank in the argument for a single European currency. "If there were a single currency a good deal of the differences would disappear."

Where to drive the hardest bargain

UK IN EUROPE

Mitsubishi Charisma 1.6 11,890 10,418 (Spain)

Toyota Corolla 10,794 8,071 (Spain)

Volkswagen Golf diesel 11,365 8,844 (France)

Volkswagen Golf petrol 10,980 7,281 (France)

Fiat Punto 55 3dr 7,627 6,351 (Portugal)

Ford Fiesta 1.2 9,945 6,813 (Portugal)

Ford Escort 1.6 12,540 11,652 (Portugal)

Nissan Micra 7,800 5,688 (Belgium)

Peugeot 106 7,985 5,924 (Belgium)

Renault Megane Scenic 12,995 10,175 (Belgium)

Prices in the table are in pounds s, translating advertised prices in Spain, France, Portugal and Belgium, including local taxes, into sterling using Friday's tourist exchange rates

Research by Agnes Severin.