Ireland taken for a ride as car prices fall across Europe

MORE than 15 million cars were bought in Europe in 2006, but new figures show Irish motorists are being taken for a spin when it comes to prices.

Germany remains the largest market in Europe, with total new car registrations in 2006 hitting 3,468,028. This represents an increase of 125,906 units or a 3.8% on 2005, with the Volkswagen Golf consistently the best selling model in the market.

Italy assumed second place in the European market with 2,347,758 units sold compared to 2,265,624 units in 2005. There were 173,373 cars registered in Ireland last year, up 67,000 on the previous year. Europe’s best selling car in 2006 was VW, thanks to several well-received new models — Passat, Jetta, Fox, Eos and Golf Plus — with Opel/Vauxhall, Renault, Ford, Peugeot, Citroen, Fiat, Toyota, Mercedes and BMW making up the top 10.

However, the survey shows that manufacturers had to cut the price of cars to stimulate sales. Based on pre-tax prices, the cheapest cars are to be found in Denmark and Hungary, while Germany remains the most expensive.

Prices rose in Ireland by an average of 1.3%, the sixth highest increase in the EU. Portugal suffered the biggest increase at 3.6%.

The reductions were highest in Slovakia where prices were cut by over 12%, followed by Slovenia, Latvia and Estonia with reductions of between 8.8% and 11.5%.

But prices also fell in some of the older member states including Greece (2.4%), Finland (1.7%), Britain (0.5%) and Denmark (0.1%).

There is a price difference of almost €3,000 between a Fiat Grande Punto in Ireland where the pre-tax price is €10,707 and Hungary (€7,756) and over €3,400 difference on the price of a Renault Megane (€10,683 and €14,103).

The difference at the upper end of the market can be even more marked with an Audi A8 selling in Ireland last year for €65,000 pre-tax and in Britain for €56,450.

However, anybody buying a cheaper car outside Ireland will quickly find the price difference disappears when they import it into the country, with punitive rates of Vehicle Registration Tax (VRT) of up to 30%.

Car manufacturers have traditionally tailored their prices to take into account the different rates of tax states charge.

They also limited competition between dealers in member states by insisting they could sell only in their designated area.

The European Commission had hoped that with the opening of the car market to cross-border competition and the elimination of barriers imposed by manufacturers, the huge difference between car prices across the EU would disappear.

The differences over the past few years have been reducing but the variations between the pre-tax cost of a model in the cheapest and most expensive country can be as high as 28% according to the latest survey.