Fleet News

New year optimism dashed by latest pricing claims

Just when everything is getting back to normal, the trade are back in full swing, auctions are still reporting successful sales and new car registrations for January are up on 2001, the bomb drops. The most unhelpful reports in the press, radio and TV about the potential reduction of new car prices by a magical £3,000 has sparked a new debate into UK car prices.

Everybody I have spoken to over the past week, whether in a casual conversation in the pub or with manufacturers and dealers, has raised this subject.

The public is now assuming that another period of price reductions is possible. The danger is that people genuinely believe it is going to happen and will again wait for lower prices. Manufacturers on the other hand are adamant it won't happen and this is a view I share. They are already losing money and cannot afford to lose any more. New cars in the UK are now probably the best value they have ever been. They are also safer and more environmentally friendly, with a better specification than ever. So how much more can be expected from an already stretched industry?

The EU wants more cross border dealing, for example, so a Belgium dealer can openly sell a new car to a customer in Germany without having their wrists slapped by the manufacturer. If the same rules were applied to the UK there would be nothing to stop a Dutch dealer setting up in England or a Lancashire dealer actively selling a vehicle in Yorkshire.

The press seems to have misunderstood the situation. Such a great start to the year with new car sales suggests that the public is happy with the deals currently available. In many cases, with all the deals being done on new, this should continue unless they stay at home to wait for new prices to collapse. They could be waiting for a long time.

The other knock-on effect would be the same as we saw at the end of 2000 and last year, when we saw used values dropping daily. This could happen again with a repeat of massive loss-making on disposals. The industry has to stick together on this subject and put aside all internal conflicts. If the EU does get its way and continues to confuse the buyers by sending out the wrong messages we could see more problems on the horizon for the UK motor industry. That must be avoided. And people must be assured that are they are getting the best deals. This is not an easy task as the public is not going to be convinced of this readily, but perhaps people should at least be reminded of recent history; the last new car pricing conflict resulted in major losses in the value of used vehicles, which affected car owners to an extent that far outweighed the savings available on new.

The second blow for the motor trade was the programme on ITV last week about 'Garages from Hell.' We know that businesses do exist that rip people off. The public can be naïve when it comes to their car and some unscrupulous garages take advantage of this. But the vast majority of dealers do a good job that is reasonably priced. The programme made good entertainment but it also sent out the wrong message about the trade. However if prime time telly can help clean up the industry and get rid of some of the rogues, whilst sending out a warning to others, then it has served a useful purpose.

With spring just around the corner sports cars will suddenly be in demand, both new and used. The seasonal factor no longer has the effect that it used to and gone are the days of people rushing out to buy a 4x4 at the first sign of snow. But they will actively look at sports cars when there is the promise of a bit of sun. So those with soft tops about to be de-fleeted should make sure that they are well prepared and ready to retail.

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