If you are one of the two million people who will take ownership of a new car in the next 12 months, then you should be fairly happy. The European commission last week announced reforms to the sales process that it hopes will reduce prices in the UK.

These changes to the "block exemption" of the motor sector from EU competition rules start to come in from October and will allow car dealers more freedom. Supermarkets may even be tempted in, because dealers will be able to handle several different makes, and will no longer be restricted to particular locations.

As recently as November 2001, the EU found that "prices in the UK are still much higher than in the eurozone" - although the highest European prices were charged in Germany and Austria. The Alliance & Leicester Car Price Index published at the end of this month, should provide a guide to the latest situation. Figures from the end of last year showed that prices had fallen just 1.5% in the year to October - a far slower rate of decline than in 2000 and early 2001.

However, motor industry experts believe that the situation has vastly improved in the UK over the last couple of years. A 10% drop in prices about two years ago was partly due to buyer awareness, according to Andy Pringle, deputy editor of What Car? magazine. "If you find better prices on the internet, you can use that when you go to a dealership." Nigel Wonnacott of the Society of Motor Manufacturers and Traders says: "It's commercial suicide to put your prices up."

Professor Garel Rhys of Cardiff Business School's Centre for Automotive Industry Research says that the stronger euro of the last few months is making UK prices look comparable with those on the continent. But he believes that competition is still so intense that prices here could fall further still: "There is a tremendous ability by manufacturers to supply more vehicles than people can buy. The rest of Europe is weak in terms of demand now so manufacturers are directing their supply to Britain, which they see as a honeypot. But, overall, competition is such that it will prevent manufacturers increasing prices. There are still some price reductions left in the system."

However, this relatively rosy consumer view does not apply to everyone. Students, people on low incomes and other buyers of 'old bangers' could be in for a nasty shock soon when they try to get rid of their vehicles. And it is also possible that the cost of being a motorist will become more expensive in the long-term as environmental concerns come to the fore.

People getting rid of cars made before the start of this month could now face disposal costs of £50 to £100, following an announcement made quietly by the government late last month. Under the EU End of Vehicles' Life Directive, motor vehicles must be "depolluted" before they are scrapped. The UK government has decided that the last owner will foot this bill until 2007, when the manufacturers will shoulder the burden. (Manufacturers are also responsible for disposal of all cars made from the start of this month.)

The directive was due to come into force in April but - just as with the environmentally correct disposal of fridges - the government has struggled to get to grips with the change. At the moment, the Environment Agency and the Department for Environment, Food and Rural Affairs are trying to draw up a processing standard, which is expected to come into force in 2003.

The depollution requirements are likely to be more onerous than the current ones - and will, therefore, cost car owners more. For instance, instead of just draining the oil, the country's 3,000 licensed vehicle dismantlers may also have to drain the brake, washer and radiator fluid, remove the glass, bumpers and other plastic components and concrete over their own sites to prevent the pollution of the ground underneath. The falling commodity price of scrap metal - albeit slightly reversed in the last few months - has meant that dismantlers who used to give car-owners £10 or £20 for an old vehicle might now want to receive £80 or £90 instead. "You could be faced with a fee of £100 to dispose of your car," says Derek Wemyss, secretary of the Motor Vehicle Dismantlers Association.

David Hulse, director general of the British Metals Recycling Association, is hoping to change the mind of Department of Trade and Industry minister Brian Wilson, who announced the decision to go this route in June. About 300,000 cars are stripped of number plates and other identification and abandoned each year.

Hulse says: "The abandonment of vehicles will increase still further. Like fridge mountains, we'll have car mountains - but they will be in hedgerows. We will also have a shortage of licensed facilities. We don't see last owners as being a sufficiently robust source of income for our members to find it worth while investing in the processes to do the job."

Colin Batabyal of insurer Esure sees the End of Vehicles' Life Directive and the new company car tax, based on emissions, as the thin end of an environmental wedge. "The overall cost of buying and running a car is likely to rise as environmental concerns become bigger factors. New types of car could be slower and more expensive."

Drivers will gradually become more responsible as the ability to track individual vehicles becomes more developed. The technology, which is due to be used in central London from the start of the new congestion charging regime next February, paves the way for monitoring or tracking all vehicles on major roads and in particular locations.

If politicians other than London mayor Ken Livingstone decide to have the courage of their environmental convictions, then motoring could indeed become more difficult and costly within a few years.