Fleet News

Fleet discounts under investigation

THE Competition Commission will scrutinise fleet discounts and the high specification of company cars in the second phase of its investigation into the UK's new car market. The former Monopolies and Mergers Commission has provisionally concluded that a complex monopoly exists, and will now interrogate manufacturers and importers, before publishing its conclusion in December.

The Commission has already written to the 20 largest car companies asking for their reaction to its provisional findings. The confidential letter, obtained by Fleet NewsNet, raised 20 issues, including the segmentation of the new car market 'by negotiating terms direct with certain categories of fleet customer and giving volume discounts which are not available to dealers'.

The Commission will now investigate whether direct dealings between car companies and fleets, and 'the high discounts' given to these customers, cause new car prices for 'retail buyers to be higher than they otherwise would be because of suppliers' need to recoup a disproportionate share of their overhead costs from retail sales'. It will also examine whether the size of the UK fleet sector, combined with company car drivers' preference for highly specified cars, have led suppliers to offer new cars with a much higher specification than in other European Union states, and if so, whether this reduces consumer choice and leads to consumers paying higher prices.

Highly specified, and highly discounted fleet cars have long been the bugbear of the Retail Motor Industry Federation, and Alan Pulham, director of the RMI's National Franchised Dealers Association, pledged to continue the RMI's campaign against the situation: 'where the retail buyer cross-subsidises the enormous discount to fleet buyers'.

His comments coincided with the launch of the 'Great British Rip-Off' campaign by the Consumers' Association, which has dismissed as 'feeble excuses' the reasons given by manufacturers and importers to justify why UK new car prices are so much higher than those on the continent.

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