Pre-tax car prices in Ireland range from the cheapest in the euro zone for one model and the most expensive in others, according to a European Commission report.

The Volkswagen Passat is cheaper in Ireland before tax than in any other euro zone country.

But prices for the Renault Clio, Nissan Micra and Toyota Yaris are the highest in the euro zone. For the most part, pre-tax prices in Ireland are close to the European average.

But the supplement charged for buying a right-hand drive car in another member-state varied widely, with Japanese manufactures charging least and the Volkswagen group levying the highest charge.

Germans pay the highest pre-tax rates for their cars but low taxes ensure the German motorist gets a better deal than many other Europeans.

Despite the recent fall in the value of sterling, British motorists still pay much more for their cars than euro-zone citizens.

The Commission warned that the future of a special arrangement that allows carmakers to operate exclusive dealership and distribution networks was in doubt unless unjustifiable price gaps are closed.

The deal allows manufacturers to maintain one-marque-only showrooms, fixing prices for different EU markets and obliging car buyers to use in-house service centres and warranty provisions.

The arrangement runs counter to EU rules on free competition, but it has been approved by Brussels because of car industry claims that the need for after-sales service means cars should not be treated like any other consumer product.

In return carmakers are supposed to maintain low prices for the same car in different national markets and to allow motorists to shop around for the best deal in any member-state.

The Competition Commissioner, Mr Mario Monti, hinted yesterday that the deal may not be renewed when it is reviewed later this year.

"The monitoring of both new car price differentials and possible obstacles to parallel trade in new cars remain a high priority for the Commission, in particular in view of the current preparation of the future legal framework for car distribution," he said.