Are car makers using the tax rise to hide price hikes?

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Car makers have been accused of using the recent VAT rise to cover price hikes of up to £2,000, according to newspaper reports.

Price watchdog CAP, which surveys nealy half a million prices, found many European manufacturers upped their prices on January 4, the same time as VAT increased to 20 per cent.

A report in the Sunday Mirror said that CAP found some of the biggest increases were on trendy off-roaders and convertibles. For example, the average price increase on all BMW models was £294, yet the price of the X1 sDrive SE jumped by £950 to £24,265.

It wasn't just BMWs that were affected, the price of the Skoda Fabia estate 1.6 TDI CR 105 also rose by four per cent from £13,770 to £14,330.

A spokesman for Skoda denied the increase saying: "There was no sleight of hand. It was coincidental".

BMW on the other hand, insisted that the increases only applied to new models.