According to a survey by the European Commission, Denmark is the cheapest country to buy a car followed by Hungary, which is the cheapest market among the new Member States. The Czech Republic is the most expensive country in the EU, with car prices 7.3% higher then the EU average. In the Euro zone, Finland is least expensive followed by Greece. Germany is the most expensive country.
More in general, new Member States appear to be, on average, cheaper than the ‘old’ Member States (pre-tax prices are, on average, 3,6% lower). But the gap has narrowed since the 10 countries joined the EU. The difference was on May 2004 still 4,9%. The prices compared by the European Commission are pre-tax prices, since consumers buying cars outside their home country are only liable to pay their taxes at home.
Where car prices have increased in Portugal (+3,6% more than headline inflation +2,9%). They have decreased in Greece (-2,4%) and Finland (-1,7%) and in the new Member States (-3,1%) while increasing for other products (+2,5%). Car prices sharply decreased in Hungary (-4,1%), Slovakia (-7,6%) and Slovenia (-8,1%).
In general, cars are becoming more affordable, the survey said, pointing out, that ‘consumer prices for cars have increased significantly less than headline inflation’. Automobile groups had even lowered their prices on eastern European countries, especially for small cars, in an attempt to capture market share among consumers with lower incomes. ‘These price changes are consistent with the long term trend, which shows that, during recent years prices for cars have tended to increase significantly less than the average price for other products’, the Commission reported.
However, the car price survey shows how despite a single currency in the Euro zone and a broadly functioning internal market, prices continue to differ markedly between EU member states. But the survey found that price differences have been stable in recent years, suggesting that further convergence is unlikely.
