Car prices: Price difference for new cars across EU narrowing in 2010

The European Commission’s latest car price report shows that car prices fell by 2.5% in real terms in 2010 in the European Union as a whole. List prices for new cars also converged slightly. These long-term price trends support the Commission's decision last year that specific competition rules for the sale of new cars are no longer justified.

"It is good to see that consumers in Europe are benefitting from competition in the markets for new car sales and continue to enjoy significantly falling prices in real terms. The fact that price differentials between Member States narrowed further is a positive indicator of cross-border competition. I am also delighted to see that for the first time in a decade, real EU-wide prices for repair and maintenance services stopped increasing, a sign that the sector has understood the new rules of the game" said Joaquín Almunia, Commission Vice President in charge of competition policy.

Overall, price differences for passenger cars between Member States decreased, as expressed in manufacturers' price lists. But the differences remain big in some cases pointing to large savings for consumers shopping across borders. Within the euro zone, the price difference indicator remained unchanged.

The EU price index for cars (reflecting nominal prices paid by consumers, including rebates, VAT and registration taxes) increased by only 0.3%, against a 2.8% rise in overall consumer prices, translating into a remarkable fall in real car prices by 2.5%.

A total of 24 EU countries recorded a fall in real car prices. Prices were stable in another two countries (+0.2% in both Italy and Malta) while they increased in Portugal (+2.6%). In the latter case, however, it should be noted that buyers benefited from a greater-then-average fall in real car prices the previous year (-6.7%).

The fall in real prices was particularly marked in Slovakia (-17.4%), Bulgaria (-13.5%), Slovenia (-11.6%) and the Czech Republic (-9.0%). In Poland they decreased by 5.6%. Among the large markets, real prices decreased most notably in the UK (­3.7%), while Germany, Spain and France experienced more moderate price reductions (-1.9%, -1.6% and -0.9% respectively).

The fall in real car prices across the EU continues a trend observed for more than a decade, which indicates that competition between car manufacturers on the market for new cars is working.

Real prices for repair and maintenance, which had increased over the last decade by more than the general inflation levels, did not rise in 2010.

The car price report

The car price report is part of the Commission's monitoring of the motor vehicle sector. It outlines the list prices of 89 best-selling car models representing 26 brands throughout the EU. The report enables consumers to compare car prices across Europe and take advantage of the opportunities of the EU's Single Market.

A memorandum containing further analysis on price developments is available at:

http://ec.europa.eu/competition/sectors/motor_vehicles/prices/report.html

Competition rules in the car sector

A new competition law framework for the car sector entered into force in June 2010 (see IP/10/619 and MEMO/10/217). The main objective of the reform is to ensure more and better competition in the after sales markets, i.e. repairs and maintenance which represent a significant part of the costs of owning a car over its lifetime. The new rules make it easier to deal with practices such as failures to release technical information to independent garages or the misuse of warranties. Car manufacturers can, on the other hand, organise their sales networks as they see best, as the experience shows that there is fierce inter-brand competition.