##mercml.jpg --Right##THE news this week that Mercedes-Benz has cut UK prices by up to 20% across its model line-up to bring them into line with mainland Europe will be welcomed by fleet managers and drivers alike. And it will be particularly well received by choosers of the M-class range where some of the biggest cuts will be made - which means reductions in company car tax bills all round, of course.

The ML320 tested here comes down in price with effect from September 1 from a list price of ú32,390 to a more realistic ú30,690 - a saving of ú1,700 - while the diesel derivative, the ML 270 CDI, comes down by ú850 from ú28,840 to ú27,990. And at the top of the M-class range, the meaty ML430 falls from ú43,390 to ú38,640, saving a whopping ú4,750.

The average price reduction across the Mercedes-Benz range works out at 9%, but the three year warranty, roadside assistance and 30-year corrosion guarantee all remain unaffected, thus giving still greater value for money, the company argues.

The moves are clearly a response to the Consumers' Association campaign for lower new car prices in the UK, and the separate Competition Commission inquiry which recently recommended a 10% cut in prices and are also intended to put an end to the growing numbers of cars being imported privately from mainland Europe.

According to director Dermot Kelly, there will be far fewer reasons to go abroad to source Mercedes-Benz vehicles while many people who have done so have allegedly been disappointed, not realising that cars here had much higher equipment levels, longer warranty cover and greater availability to start with. And there is always the residual value problem of bringing non-standard cars back to the used market at the end of their fleet lives.

According to the experts at CAP, there will be very little impact on three-year residuals as a result of this price move although there may be some immediate pressure on some of the 12-month-old stocks of CLKs which have been making very strong money.

But where there has been increased pressure of late has been at the top end of the 4x4 market where, due to increased competition from the likes of BMW and Lexus, both about to launch luxury off-roaders of their own, the M-class is likely to be marked down by up to ú700 next month in CAP's Monitor residual value guide.

Another factor in the equation is the resurgence of Land Rover under its new owner, Ford, which too is likely to have an impact on M-class residuals. So while the price cuts have been good news for fleets this week at the front end of the buying cycle, it looks like there may well be some bad news to come three years down the line.

Now, what was that old saying about gaining on the swings and losing on the roundabouts?

Mike Gunnell