Fleet News

Attack on discounts labelled ill-informed

FLEET operators and manufacturers have hit back at ‘ill-informed’ criticism that attacks discounts available to company car operators.

Organisations were responding to a Trade and Industry Select Committee report on the UK automotive industry, which specifically called for the Office of Fair Trading to re-examine the difference between car prices available to fleet customers, compared with the retail buyer.

In the select committee report, MPs said that, despite car prices falling: ‘It seems clear that there is still scope for individual consumers to pay less for their cars. If bulk purchases by dealers were discounted in a similar way to fleet purchases of a similar size, consumers might benefit from this consolidation. At the moment that does not appear to be the case. Under these circumstances we would recommend that the Office of Fair Trading re-examines this area.’

But the comments have provoked fury in the fleet industry, which has only just recovered from a collapse in residual values caused by the last Government attempt to push down car prices, that created a crisis of confidence in the industry.

This week, Stewart Whyte, director of the Association of Car Fleet Operators, said: ‘The comments from the Trade and Industry Select Committee are unwelcome and appear to be ill-informed. So far as we are aware, any willing large car retailer is able to match – on a deal for deal, like for like, basis – the buying terms available to the overwhelming majority of fleet operators.

‘This is reflected in The Supply of New Cars Order 2000 that legally requires ‘equivalent discounts’ to be offered to all bulk buyers.’

ACFO said that history showed when new prices were reduced, there was an automatic knock-on effect on used car prices, wiping out any potential savings.

The Society of Motor Manufacturers and Traders said it was ‘disappointed’ by the criticism. SMMT chief executive Christopher Macgowan said there were some aspects that were positive, including a warning about a lack of skills in the industry and the dangers of over-regulation.

He added: ‘In the past five years new car prices have fallen by an average of 9.2%. Also, the Supply of New Cars Order 2000 requires manufacturers to offer exactly these ‘equivalent discounts’ to bulk buyers.’

The SMMT also rejected claims that restrictive practices were used to prevent new entrants from competing in the service and repair market.

But the Retail Motor Industry Federation said the criticism of fleet deals was good news for the consumer, claiming that private buyers had been cross-subsidising daily rental and large fleet buyers for years.

Alan Pulham, franchised dealer director for the Retail Motor Industry Federation, said: ‘We are delighted that the Trade and Industry Select committee has highlighted once again the big difference between car prices available to fleet customers, compared with the retail buyer.

‘We believe that the practice favours the fleet buyer, at the expense of individual consumers and dealers.’

  • To see the full report, log on to www.publications.parliament. uk/pa/cm200304/cmselect/cmtrdind/437/437.pdf
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