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Challenge to leaders

BMW GB believes it can challenge top-of-the-range Mondeo, Passat and Vectra after announcing a price realignment of up to 17%.

Phil Horton, BMW GB marketing manager, claimed price action by luxury manufacturers, combined with gains by carmakers at the lower end of the scale, could put a squeeze on market leaders Ford, Vauxhall and Volkswagen.

He said: “Volume carmakers haven't moved on price and now we are closer to their top of the line models. With similar price cuts from other luxury manufacturers, the market could polarise with those in the middle feeling the heat.” BMW GB has reduced prices on average by 5%, adding a further 5% value by improving specification.

The size of the cuts differs across the range - the M5 is down 17%, for example - but were designed to price models against the German market. “About 10,000 BMWs will be imported to the UK this year, most from Germany,” said Mr Horton.

“It's a big proportion against our sales of around 69,000 units, but the incentive to buy abroad is now marginal.” The move would “maintain our competitive position in the UK after the price cuts made by Mercedes”, he added.

BMW has suffered from the so-called 'retail buyers' strike', losing up to 7,000 sales as a consequence. “Now we have made a move on prices, people will hopefully return to the market,” said Mr Horton. He was relieved that BMW - which had started becoming involved with bonus incentive schemes for the first time in 10 years - could now “move back to our normal trading terms”, erasing the stress caused to residual values.

Despite the price cuts, residual values in the UK are expected to strengthen as BMW is unlikely to receive enough models from Germany to satisfy pent-up demand, to be “released through September to November”.

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