Fleet News

Call for Government to tackle real pricing issues

CAR manufacturers are calling on the Government to ignore the 'rip-off' Britain campaign and concentrate on tackling the 'real issues' behind price discrepancies. These, they say, are the strong pound, high interest rates and the massive differences in taxation rates across Europe.

The Society of Motor Manufacturers and Traders says the latest pan-European pre-tax car pricing survey by the European Commission shows how car makers' efforts to reduce the amount customers pay for new vehicles is being continuously hampered by the negative impact of the overvalued pound and its impact on price differences across the EU. In its report, the EU claims the pre-tax pricing differential between the UK and other member states is as high as 35%.

In the period between the last bi-annual EU survey, in May 1999, and the latest survey, the SMMT points out that the value of Sterling increased by 3.4%, but simultaneously new car prices in the UK fell by 1.4% according to independent surveys. Research by CAP also demonstrates a 'gradual realignment' of prices rather than a sudden drop. The CAP Index shows new car prices in February are down year-on-year by 1.6% - compared to 1.3% recorded in January.

Christopher Macgowan, SMMT chief executive, said: 'We are calling on the Government to end its 'rip-off' campaign against the largest manufacturing sector and deal with the real challenges of an overvalued pound and uncompetitive interest rates. Sterling is at a 14-year high and interest rates in this country are nearly double European rates. We have no control over these factors. It is important to remember that once local tax has been applied, the differential is often removed.'

Vehicle taxation rates in Europe vary widely. For example, whereas car buyers in the UK pay 17.5% VAT on the price of a new car plus a £25 first registration fee, drivers in Denmark have to pay an additional tax of up to 213% on the list price, Greece an additional tax of up to 125% and Finland 90%. Figures provided by the SMMT show how the on-the-road price of a Vauxhall Vectra in the UK is £13,995, whereas in Holland the same car - due to a tax rate more than double the UK's - was £15,624 and a Renault Espace costing £19,844 in the UK and £20,932 in Holland.

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