Car prices have gone up thanks to a 'perfect storm' according to research

4:16 pm, February 14, 2017

A PERFECT storm of rising inflation and the car industry’s efforts to increase dealer profitability has lead to significant price hikes, according to independent research.

While car prices have risen by an average of 5.2 per cent in the past seven months, the situation varies greatly from sector to sector, according to What Car? magazine.

Luxury cars are actually 0.2 per cent cheaper than they were last June and executive saloons just 0.8 per cent more expensive, whereas performance cars and MPVs now cost 8.4 per cent more on average and large SUVs 12.3 per cent.

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.

Vehicles costing less than £200 per month – the holy grail for many car buyers – now make up 9.9 per cent of the market, compared with 13 per cent seven months ago, with the same deposit in each case. But What Car? says great deals are still available for buyers in all sectors.