Fleet News

Government warned to stay out of new car price controversy

THE Government has been warned against intervening in the long-running new car pricing controversy with the consequences being 'too painful to contemplate'. Following a severe devaluation in used car prices in the last 18 months the Government has been issued with a 'hands-off' message as the Competition Commission moves into the final stages of its car pricing investigation.

The rebuke to the Government comes from Glass's Information Services. Chief car editor Adrian Rushmore said: 'Manufacturers have been attempting to address the twin problems of being competitive in a price-driven market and at the same time ensuring that used car prices do not tumble as a result. Both new and used prices must continue to fall, but in a managed and progressive way. That is why we urge the continuation of the current state of play, which is best described as 'damage limitation'. The consequences of Government intervention in the pricing mechanism are too painful to contemplate.'

He added: 'There is a widespread fear that new car prices may tumble, thereby immediately affecting the value of late used ones. The volume manufacturers have such a huge stake in the used car market, that any such action will border on commercial suicide.'

The Competition Commission is due to publish its report into UK new car prices on December 16, with its focus being on the competitiveness of the market place. The nightmare scenario for fleets, leasing and rental companies, manufacturers, traders and private buyers would be an overnight reduction in new car prices which would have the knock-on effect of instantly wiping hundreds of pounds off the value of every car on the UK's roads and on dealers' forecourts.

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