MITSUBISHI claims its vehicles will be cheaper to run for fleets and company car drivers after it slashed up to 15% off its new car list prices, increasing the furore over UK new car prices just days ahead of the December 16 publication of the long-awaited Competition Commission pricing inquiry report. The importer argues that its realignment will enhance rather than damage its residual values, saying that the UK's secondhand market has allowed for cuts in new car prices over the past 18 months.

The price of used Mitsubishi models expressed as a percentage of their list prices should certainly rise under the new pricing structure, while company car drivers will reap the advantages of the price cuts in lower benefit-in-kind tax bills because benefit charges are based on a car's delivered price. The question is whether Mitsubishi's move will open the floodgates to industry-wide price reductions in 2000. Kia and Saab have already cut their prices significantly, and this week Vauxhall launched a retail cashback payment of up to £2,000 for certain models if customers forego 0% finance and deposit allowance deals.

Mitsubishi claims that the UK's new car market is virtually at a standstill, and says its radical price realignment is designed to 'restore consumer confidence'. Denis Murphy, Mitsubishi's managing director, said: 'Our customers have stayed away from the showrooms since September and we believe this will continue unless we move on price.'