New car prices increased 1.6% during March, compared with the same month last year.

The What Car? Price Index, which tracks the cost of buying cars, reports that prices rose despite new car sales dropping 5.6% year-on-year in the month when the 05 plate was introduced.

Buyers of nearly new cars (one-year old) and used cars (three-years-old) are having a better time as nearly new cars dropped in value by over 6% in March, while used car prices dropped by 7.5% – both compared with March 2004.

Steve Fowler, What Car? group editor, says: "Given the slow new car sales in January and February, we’re surprised our Price Index didn’t show a drop in prices during March – we’d expect dealers to be trying to entice more buyers into the showroom. It will be interesting to see if their tactics continue, especially as prices of second-hand cars on dealer forecourts are coming down markedly."

Only three types of new car are cheaper than they were a year ago:

City cars (eg Ford Ka) 1.4%
4x4s (eg Land Rover Freelander) 2.1%
Executive cars (eg BMW 5 Series) 0.5%

Six categories were noticeably more expensive than they were a year ago:

Superminis (eg Vauxhall Corsa) +0.2%
Small cars (eg Peugeot 307) +4.0%
Family cars (eg Renault Laguna) +2.5%
MPVs (eg Ford Galaxy) +1.4%
Compact execs (eg Merc C-Class) +1.4%
Luxury cars (eg Audi A8) +3.0%