Car prices soar by £2bn

UK car buyers have faced nearly £2bn in price hikes in just seven months, according to research from What Car?

It’s found that prices have risen by an average of 5.2% since last June, blaming rising inflation and the car industry’s efforts to increase dealer profitability.

These increases are thought to be partly a by-product of the Brexit vote, which immediately knocked the value of the pound and consequently the cost of importing both cars and the raw materials that go into their production.

However, they are also part of a longer-term trend which has seen manufacturers gradually reduce discounts and withdraw many of the most appealing zero per cent and low-rate interest finance deals as they seek to regain control of profit margins.

However, the situation varies from sector to sector. Luxury cars are actually 0.2% cheaper than they were last June and executive saloons just 0.8% more expensive, whereas performance cars and MPVs now cost 8.4% more on average and large SUVs 12.3%.

‘We knew average prices were going up, but rather than a gradual rise, our research has shown that there has been a perfect storm of elements that has conspired to create a big bang in price hikes,’ said What Car? editor Steve Huntingford.

‘Fortunately, the aggressive sales targets that many dealers have mean you can still get a great deal if you buy from the right place.’