The yes-they-have, no-they-haven’t argument over the UK’s perceived high new car prices has taken a new turn with the Alliance and Leicester (A&L) claiming that prices have actually fallen in real terms by an average of 12.7% over the past three years while prices for homes and consumer goods have risen sharply.

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According to the Financial Times (FT), the A&L figures show that for some categories of vehicle the price drops have been steeper with ‘multi-purpose vehicles’ (minivans) like Ford’s Galaxy falling by an average of 21.5%.


The latest Alliance & Leicester monthly car price index measures prices actually paid by buyers rather than list prices set by manufacturers, which are almost invariably subject to negotiated discounts, the FT said.


The newspaper said the A&L figures contrasted with the trend in list prices as monthly statistics from motor trade monitoring body CAP showed that list prices for new cars in July were up by around 2.9% over the same month last year.


The FT said the consumer groups would welcome Alliance & Leicester’s figures as evidence that their campaign against allegedly “rip-off” new car prices has paid off.

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But the newspaper noted that prices of used cars have been falling even faster, meaning that the cost of trading up is growing.


The FT said that average prices of one-year-old cars have fallen by 16% while three-year-old cars – a key change point for company cars – dropped 20.6%.


However, the FT said, transaction prices of luxury cars such as Jaguar’s XJ8 and the Mercedes S-class fell by only 1.9%.


Compact executive cars such as BMW’s 3-series fell by 8.8%, superminis by 7.2%, small family cars by 20.3% and the smallest city cars such as the Ford Ka by 20.9%, the Financial Times said.