Average retail prices for new cars in the UK rose by 4.7% over the 12 months to December 2003. The movement in retail prices in the UK was 0.1% stronger than across Europe as a whole, where the average price rose by an average of 4.6% in the year to December.

The latest eurocarprice.com European new car price index, published in association with PricewaterhouseCoopers, shows that new car retail prices in the UK in December were 1% lower than the average price of a new car in the euro currency zone.

Of the 19 countries covered by the index, Poland saw the greatest increase in retail prices, up by 12.3% during the 12 months to December 2003. At the other end of the scale, retail prices in Finland increased only 0.2%.

PricewaterhouseCoopers Autofacts retailer capabilities division head, Charles Seguin, said: "As the supply of vehicles continues to increase and the effects of the block exemption regulation begin to work their way through the system, it appears as though prices will begin to converge at a higher level than when the regulation was first introduced."

Eurocarprice.com operations director, Robin Goodyer, added: "While some European markets will see some growth in 2004, they are unlikely to satisfy manufacturers' increased revenue requirements without price rises higher than those experienced in recent years."

Pre-tax car prices in the whole of Western Europe (euro and non-euro currency markets) rose 1.7% in the year to December compared to a rise of 1.0% in the year to November.

Relative to average car prices in the euro zone, Greece has the lowest pre-tax prices for cars, at 14% lower than average. Switzerland, where pre-tax prices are 14% higher than the euro zone, has the highest relative pre-tax prices.

Annual price performance in the volume segments continued to strengthen in December. Average pre-tax prices across western Europe for small, lower medium and upper medium models all showed a markedly stronger upward trend. The price trend in the mini segment, however, is for continued decline - prices were 1.7% lower compared to December 2002.