Fleet News

Carmakers ponder the impossibility of car price harmony

VEHICLE manufacturers face an impossible conundrum in balancing UK new car prices with continental new car prices due to massive currency fluctuations, Peugeot managing director Tod Evans told fleet managers at the third Fleet News Editor's Lunch.

Following 18 months of pricing uncertainty, which has resulted in a dramatic slump in residual values, Evans said the weakness of the Euro against Sterling was continuing to impact on new car prices.

'Manufacturers have been working very hard to bring about price changes,' said Evans, who claimed that a combination of price cuts and specification enhancements amounted to a 30% change in 'real' vehicle pricing to the benefit of fleets and company car drivers.

However, that benefit had been comprehensively 'lost' - perhaps by 25% - due to currency fluctuations. Currency differences alongside tax differences and the 'problem' that tax on a vehicle was paid in the country of use and not in the country of purchase were the reasons for pricing disharmony, he said.

'There has been a 10% move in vehicle pricing compared with a month ago because the euro has dropped 10% against the pound. It does not matter what manufacturers do with pricing, there is still a difference,' Evans told guests.

The key clause stating that new car dealers should be able to buy cars on the same discount terms as fleets must be implemented by December 1 and Evans outlined his fears that manufacturers, including Peugeot, were grappling with the implication that the clause could undermine the value of important business with fleets, the viability of the dealer network and brand management.

One of the major impacts of the dealer discount clause could be a two-tier network where only the biggest survived and Evans warned: 'We could end up with 10 vehicle distributors in this country, which means the power of managing the brand moved to the vehicle retailer and would not be with the manufacturer and that is something we find wholly inappropriate.'

Concluding his scathing attack on the order, Evans told fleet chiefs: 'We are dealing with politics and public perceptions and a quick win. Rip-off Britain is electorally convenient.'

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