Fleet News

'Rising stock and consumer pressure will affect prices'

GROWING buyer resistance and rising stock levels are more likely to force new car prices down in the short-term rather than the 'statement of possible remedies' from the Competition Commission published earlier this month. John Lawson, motor industry analyst at Salomon Smith has predicted price cuts on volume-selling cars in the UK of 10%,

In a report he acknowledges that the Competition Commission's initial remedies focus on UK car distribution which will largely be dealt with by the European Commission's review of the block exemption, which is due to expire in 2002. However, the EC's latest investigation into price-fixing - a raid on Peugeot's French offices - indicated the 'pressure building which could force wholesale abandoning of the current car distribution model', claimed Lawson.

Referring directly to the UK, Lawson said: 'Car makers are beginning to look as though they are losing the battle to stem a rising tide of UK consumer disquiet. Heightened sensitivity to price differentials; the scramble by makers and dealers to clear stocks and pre-register cars ahead of their end-year balance sheet dates are more likely levers of significant price erosion even ahead of the Commission's report. As a result, pricing is liable to become even more competitive in the months ahead.'

Claiming that on the back of a stronger Sterling, average UK car prices were about 20% above the weighted average of the largest Eurozone markets, Lawson added: 'We sense it is increasingly likely that car prices could fall by a significant margin in the UK. Some 54% of new cars sold in the UK go to fleets, who pay prices much in line with European norms - thus it is car prices to private buyers where changes are liable to bite.'

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