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Manufacturers are using PCPs and finance offers to 'sell' new cars with attractive monthly payments, taking the focus off increasing retail prices.

One of the clearest indications that personal contract purchase is gaining favour with vehicle manufacturers is the increase in 0% PCP.  Seven manufacturers now offer this funding option compared to two this time last year, according to research by Newcarpromotions.co.uk.

From collating and comparing new car offers advertised by 24 leading vehicle manufacturers covering 95% of the retail market, it found:

- the average price of a new car has risen over the past three months by 1% to £25,083 (the past 12 months shows a 2% increase)
- 10 of the leading 24 manufacturers have increased their prices within the past three months with Citroen showing the largest increase of 7%, followed by Audi with 6% and Fiat with 5%
- seven manufacturers’ pricing has remained static with the remaining seven actually reducing their prices.  Kia has seen the largest reduction with a 5% fall in RRP.

A Newcarpromotions.co.uk spokesman said: "PCP finance is extremely popular with vehicle manufacturers enabling them to offer optically attractive monthly payments and taking the focus away from hefty RRPs. 

The theory is that people are willing to ‘rent’ a new car to have lower payments and the latest models and specifications. 

"This funding method also enables people who may not have been a new car buyer to own a brand new car.  Low monthly payments and regular changes into the ‘latest thing’ are appealing."

A detailed analysis of new car price changes and the various finance offers is available in a free report that offers insight into manufacturer and dealer performance in Q1 2013, major acquisitions, changes in franchised networks and consumer confidence and finance offers.

The report is called AMi Market Watch. It incorporates information from our data and insight platform AMi: www.am-online.com/ami.

It also includes exclusive research into the finane offers available to new car buyers and into consumers' confidence in buying new and used cars this year and the favoured brands.

AMi Market Watch Q1 2013 contents:

- Q1 new car registration performance
- Retail network changes: total and significant growth or contraction by manufacturer
- Sales per franchised outlet data and brand comparison for 2013 and historic
- Dealer group financial status report on 2011 and latest from 2012
- New car pricing and finance offer trends
- Consumer confidence survey
- Launch activity in Q1 and Q2
- News summary - key events in the year-to-date

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