Car prices converge in enlarged EU

The European Commission’s latest report on car prices shows new car prices converging across the EU, including in new Member States. While price differentials between certain countries, and particularly for certain models, are still significant, the gap is closing. In the euro zone, pre-tax prices are generally lowest in  Finland and most expensive in Germany. Looking at the EU as a whole, cars are less expensive on average in the new Member States, with Estonia being the cheapest market.

Improved convergence across markets
Price differences, based on 1 November 2004 figures, are smaller than those recorded in May 2004, with the average standard deviation of prices between the 25 national markets falling from 6.9% to 6.4 %. New Member States account for two thirds of this convergence, while dispersion remains low at the euro-zone level (4.4% as in previous report).

But price differences for particular models between the cheapest and most expensive Member States can still be substantial. Of the 1909 prices quoted in the report, 598 exceed by more than 20% the cheapest market in the EU (compared to 813 out of 1788 in the previous report). The widest price difference is for the Opel Astra, one of the 10 top best selling cars in EU in 2004, which costs almost 50% more in Germany than in Denmark. This difference represents a potential saving of €3700 for the German consumer (including VAT) buying in Denmark.

Cheap and expensive Member States
Germany, and to a lesser extent Austria, continue to be the more expensive markets in the EU for the models surveyed. In Germany, 38 models out of 91 in the report are sold to consumers at the highest prices in the euro zone, and 21 of these are 20% more expensive than in the cheapest national market within the euro zone. Within the euro zone, Greece and Finland are cheapest. Outside the euro zone, Estonia has replaced Poland as the cheapest market in the EU with prices 2.5% below Greece.

Prices stable
Compared with end 2003, car prices at the end of 2004 had increased by 0.5% in the EU (+0.9% in the euro zone). Headline inflation amounted to 2.4% over the same period both in EU-12 and EU-25.

Car prices decreased in Germany (-0.1%), the UK (-1.2%) and the Czech Republic (-6 %). Prices increased, though at a very moderate pace, in France (+1.1 %) and Italy (+0.8 %).

Member States with traditionally low pre-tax prices generally did not experience significant increases in consumer price for cars, except in Poland (+7.4 %). Prices increased somewhat in Denmark (+1.6 %) and Greece (+2.2 %), whereas they decreased in Finland (-1.7 %), in Estonia (-8.4 %) and in Lithuania (-2.8 %).

Background:
The Commission has introduceda new block exemption Regulation applying EU competition rules to the motor vehicle sector (see IP/02/1073) and has taken several cases against car manufacturers who were limiting parallel imports of cars across internal EU borders.

For more information:
- MEMO/05/82: Car prices: end of 2004 survey - methodology and details
- DG Competition website: all reports (full versions) on car price differences

car_prices_end_2004.pdf (69 KB)