EU car price gaps remain "substantial"

And despite being knocked off the top spot, Britain remains among the most expensive nations for car buying.

Competition Commissioner Mario Monti advised car buyers to "compare prices in different member states" to find the best deals.

Price gap

Based on prices before tax in May this year, the report named Greece, Finland and Denmark as the cheapest places to buy cars in Europe.

Mr Monti did say car price differentials were "less extreme" than in previous years, but they are still failing to achieve the EC's ideal of a 12% price gap.

Countries with highest car prices Germany Austria United Kingdom

For example, the difference in the price of a pre-tax Fiat Seicento is 45.5% between Austria and Spain, with Spain the cheaper of the two.

The car price report added that UK buyers are forced to pay more as prices there include the added cost of meeting right-hand drive specifications.

For drivers buying in another member state, the cost of the supplement is lowest for Rover and Volvo cars and highest for Volkswagen group models, it added.

The news comes despite last year's launch of new EU rules on motor vehicle distribution.

The measures obliged manufacturers and distributors to open up their dealership networks to more competition.

EU countries with lowest car prices Denmark Greece Netherlands

The Commissioner added it was clear the rules "had not yet reached their full potential" as they were still within the one-year transitional period.

But, he warned: "This report shows slight though insufficient progress towards a truly single market for car distribution.

"A consumer who buys a car at a lower price in another member state should not face any anti-competitive obstacles."

Further steps to improve integration will take place in October 2005.

After that date manufacturers will no longer be able to stop dealers from opening new outlets where they wish - including in other member states.