CAR buyers benefited from bargains last month, according to a price index report out today.

Average new car prices were 1.5 per cent lower in March 2003 than in March 2002, the index from Alliance & Leicester bank showed.

The best deals were on city cars which fell an average of 5.9 per cent, the index produced in association with What Car? magazine revealed.

Cars one year old were 9.8 per cent less expensive than in March 2002, while three-year-old cars were 11.9 per cent cheaper.

Alliance & Leicester e-commerce director Andrew Robinson said: "Now is a great time to buy. As predicted, dealers have been forced to discount following a slow start to the year. Buyers are free to take their pick of cars in almost every category, ending the debate about best buys.

"Buyers will land on their feet no matter what they decide to splash out on great news for the 2.4 million new car buyers in the UK, and even better for the more than seven million second-hand car buyers."

What Car? editor Rob Aherne said: "March was crunch time for beleaguered dealers desperate to move stock off their forecourts.

"Poor sales for January and February meant dealers were forced to discount heavily across the board, in order to take advantage of potential interest from (index) plate-change buyers."

n While buyers are taking advantage of the low prices, monthly car production figures have risen for the first time since last October.

A total of 151,848 cars were made in the UK in March 2003 2.7 per cent more than in March 2002, the Office of National Statistics said.

Production for the home market was down 16.7 per cent last month, but export production rose 15.8 per cent.