FIGURES released from the Alliance & Leicester Car Price Index, produced in association with What Car?, show that the average price consumers were paying for new cars in November was 2.2 per cent lower than 12 months earlier.

This compares with a 1.5 per cent year-on-year fall in October. Andy Bayes, for Alliance & Leicester, said: "Consumer confidence in the new car market remains high and new car prices remain cheaper than a year ago. There is a marked divergence between different categories and great bargains to be had - particularly on MPVs and small cars, with prices falling by 7.9 per cent and 11.2 per cent respectively."

Steve Fowler, editor of What Car?, added: "Fierce competition in some categories is driving real bargains. Better than average deals are available on MPVs and small cars at the moment. However, we have seen one or two slight price rises creeping in. Buyers will expect to get something extra if they have to pay more and dealers will still have to be ready to discount to win buyers' business in 2002."

Prices for nearly new cars (one year old) and used cars (three years old) climbed year-on-year by 0.9 per cent and 0.3 per cent respectively. This compares with dramatically larger year-on-year rises of 9.8 per cent and 5.5 per cent in October.

The Car Price Index shows that new car prices fell by 2.2 per cent year-on-year compared to a 1.5 per cent fall in October. Family cars and compact executives demonstrated the only rise (both up 1.8 per cent), with MPVs once again showing the largest fall (11.2 per cent).

Douglas McWilliams, of the Centre for Economics and Business Research, said: "Car showrooms may be busy at the moment, reflecting the overall strength in consumer spending. However, either consumer spending will slow of its own accord, or the Bank of England will raise interest rates."