UK new car prices fell 2% in August from a year earlier, the steepest decline since September 2002, as car makers increased competition for customers, Bloomberg News reported, citing an Alliance & Leicester Plc bank’s regular survey.

The news agency noted that a government report in 2000 recommended that car makers cut prices in the UK by 10% to bring them in-line with continental Europe. Recent price cuts have given buyers more confidence to haggle, A&L said, according to Bloomberg News.

“Consumer demands and the pressure from manufacturers to keep the UK new car market buoyant has meant the price of cars has continued to be driven down,” Andy Bayes, head of motor finance at A&L, said according to Bloomberg News.

The report said that London-based Alliance & Leicester’s Car Price Index showed the average car now costs 14% less than it did five years ago.

Among used cars, the cost of a three-year-old car declined 5.6% in August from the year-earlier month and the cost of a one-year-old car dropped 2.6%, the index said, according to the report.

Bloomberg News noted that UK new car sales rose 2.4% in August while eight-month sales increased 0.2% to 1.63 million cars.

– While there’s no doubt that UK car prices have fallen in recent years, a recent just-auto look at pricing around the globe for a popular Honda model indicated there are still major discrepancies between the UK and other markets.

Honda’s ‘Euro Accord’, a model designed for Japanese, Asia-Pacific and European markets, and which is narrower than the ‘US-market’ Accord, is proving very popular with buyers world-wide with some local distributors in the US, Asia-Pacific and the Far East now offering it alongside the ‘wide’ US car.

Best prices in August were found in New Zealand: base 2.4 manual – $NZ35,000 (£12,588); top leather-trimmed 2.4i ‘Euro L’ auto: $42,000 (£15,108).

In contrast, the UK price for the 2.4i manual Sport was £19,100 and the top 2.4 auto was £22,100, though it does get sat-nav as standard. The cheapest UK Accord, a two-litre model, was £16,000.

A reader in the US pointed out that the ‘Euro Accord’ was sold in the US as the Acura TSX and the only models available are high spec ones with leather and the 2.4-litre VTEC engine. Base price in August was £16,500 for a six-speed [manual] or auto and, with sat nav and every possible extra this went up to £17,700.

Still a long way off the UK prices.

Another example is DaimlerChrysler‘s Jeep Liberty – sold in the UK as the Cherokee. A fully-equipped 3.7-litre V6 Limited automatic model with the optional leather trim pack and sunroof costs £24,800 on the road in the UK but just $US28,965 or £17,470, including destination charge, in the US, according to pricing sourced from Jeep’s consumer website.