Fleet News

Car price cut claims mask mixed picture

MOTOR industry claims that new car prices are falling mask significant discrepancies in certain areas of the market. While prices among certain classes of vehicle are undoubtedly lower than this time last year, independent experts have shown that the transaction price of some new cars has risen by as much as 4.2%, well above the rate of inflation.

CAP Motor Research and the Alliance & Leicester's new Car Price Index all agree that across the entire new car market prices are between 0.7% and 1.9% lower now than 12 months ago. But the Alliance & Leicester's index shows that a 9.2% fall in supermini prices has helped to offset a 2.1% increase in the price of lower medium sector models, a 1.5% increase in the upper medium sector, a 2.2% rise for MPVs, a 3.2% increase for compact executive cars, and a 4.6% rise for executive models.

This revelation will dismay manufacturers that have been fighting a rearguard action on pricing in the face of fierce public scrutiny led by the Competition Commission's 'New Cars Inquiry'. CAP insists, however, that changes in list prices are increasingly irrelevant because official price lists serve only as a basis for negotiations, and fail to reflect the value of deals. CAP has also identified increases in the price of executive cars and MPVs, but said that since these sectors are dominated by fleet, rather than retail business, the list price is irrelevant.

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