The first few days of December brought the cuts to list prices which the industry had been waiting for. A flurry of announcements from VW, Peugeot and Fiat – all of which had held out against the tide of change – brought some order to the market.
Carmakers are already looking forward to the plate change next spring. By making the cuts now, but ahead of the crucial months of January and March, they are able to plan marketing campaigns through the first quarter of 2001.
Some, notably Fiat, Peugeot and Citroen, have been confident enough to put four- month finance plans into place now and have already announced deals that will stretch through to the end of March.
However, for the majority, this is still a period of waiting. Most of the current retail finance plans run out at the end of December and we can expect a raft of new measures from January 1.
The 0% finance route remains the mostº popular long-term package for the moment. This helps tie customers to list price and avoids any problems with end values. While interest rates remain relatively low, and may even fall in the medium term, it is also relatively cheap for finance houses.
Dealers planning their own 0% packages – on nearly-new stock, for instance – need to be aware of OFT legislation which bans cross subsidy. The 0% has to be a genuine offer – you cannot then sell the car at a cheaper price to somebody who does not take the finance.
Cheap rate finance, which these days can be considered anything under 10%, is hard to find and is limited to selected models. Ford, Renault and Peugeot continue to offer packages in this market on their retail customer models.
A notable absentee from the current list of finance packages is Volkswagen Financial Services. The group pulled out of subsidised finance when it first made temporary prices cuts and has not yet come back in. It will interesting to see if market pressure forces a change of heart early next year.
|HIGH STREET LENDERS (36-MONTH LOANS)|
|Loan Amount||Lender||APR||Monthly Repayment
|Source: Automotive Management**|