Fleet News

Tumbling car prices to kill off dotcom buying?

TUMBLING new car prices could lead to the death of some internet car buying companies, it was claimed this week. With the Government publishing new legislation designed to ensure dealers who buy cars outright can benefit from similar discounts to fleets, so-called dotcom companies, which typically import cars, will lose their price advantage.

However, there is no suggestion that internet-based businesses launched by UK dealer groups such as Pendragon and Dixons will fail. Fleet managers have largely ignored internet car buying as dotcom companies cannot deliver cars in quantity and lengthy delivery times are usually involved.

Last year Ford launched a pilot internet operation in Finland but FNN understands only a handful of cars have been sold. However, Vauxhall says it has supplied more than 1,000 of its dotcom cars since November 1 to retail buyers.

Ford fleet operations director Mike Wear said: 'Dotcom companies are a legitimate defence mechanism for manufacturers. However, they have been launched on the strength of the pound and European price differences. The pound will not be as high as it is now forever and the price differential is not that great on the majority of cars bought on the internet. When the differential erodes, there is no rationale for the independent dotcom companies.'

Renault fleet director Keith Hawes said: 'Internet car selling companies have a questionable future. On the basis of the recent Department of Trade and Industry order, customers have been reassured prices will be lower in the franchised network. There is no evidence these sites are selling cars in volume, although there is a future for internet sites which act as bulletin boards for dealerships to provide information and draw

customers in.'

Most internet car buying companies are brokers and in the future they could broker cars bought in volume by dealers from manufacturers but surplus to requirements, according to one industry source.

A Vauxhall source said: 'There is room in the market for other players besides dealers. The key for the dotcom companies is there will be a point when their margins have been squeezed so much they are no longer making money.'

Virgin Cars - launched earlier this year amid predictions of the 'death of the fleet car as we know it' now admits that cut price internet retailing has to give way to offering added value services to win fleet business.

A spokesman for Virgin Cars said: 'If a site is just about cut prices, then it may well fold, but we are an added-value service.'

Virgin uses UK and European dealers as well as providing servicing packages that include delivery and collection of the car.

But a spokeswoman for Carbusters.com, the Consumers' Association's cut-price internet-based car import scheme, said the price cuts expected did not go far enough, so the site would continue to thrive. She claimed that since its launch on March 28, more than 1,300 cars had been bought.

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