Despite an average three percent increase in new car prices in the 12 month period to March 2002, lots of discounts and offers resulted in UK consumers paying less on the forecourt.

Analysis of manufacturer list prices by Glass's Information Services for the 12 months to March 2002 shows an average rise of two percent for superminis, three percent in the lower medium class and four percent in the upper medium class  for an overall average price increase of about three percent.

"What manufacturers ask and what consumers are prepared to pay are often different matters," said Glass's managing editor Adrian Rushmore.

"To arrive at the final answer, one has to take into account dealer discounts, manufacturer cashback offers, finance deals and the ever popular free insurance schemes."

Glass's tracking shows that once all these factors are taken into account, consumers actually paid slightly less for their new cars in March this year than they did in March 2001.

It also appears that consumers prefer to pocket any saving they can negotiate rather than use it to buy a more highly specified model.

If this trend remains whilst manufacturers continue to try and edge list prices upwards, it will shift demand to lower specification, cheaper models, Glass's said.

Used car prices have fallen back in line with the reduced amount paid for new cars, reducing the average value of a one-year-old used car by about two percent this March compared with the same month last year.