THE price of the average new car is up by 1.4 per cent, equivalent to an increase of £182, according to the monthly Glass's New Car Market Trends report.

However, this is below the rate of inflation and certian types of car, such as the supermini, have seen list price reductions.

Alan Cole, editorial consultant for the Glass's Market Intelligence Service, said: "Current low levels of list price inflation are particularly noteworthy given the continuous improvements being made to vehicle specifications, as well as the growing physical dimensions of new cars in most sectors.

"Buyers are effectively getting more for less. However, demand is simply not strong enough to enable vehicle manufacturers to increase prices in response to rises in steel and energy costs.

"Dealers are caught between a rock and a hard place. Retained margins of one per cent or less on the selling price of a new car are the order of the day, and new car profitability is still in decline.

"This all means there is very little room to offer further discounts on new cars and with finance deals already very attractive, retailers have to be increasingly imaginative to secure consumer interest."