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Grace warns of fall in residuals

##Grace(1)--left##The Government response to the Competition Commission report should give dealers more control over their own destiny and begin to restore consumer confidence, according to Adrian Grace, GE Capital Woodchester marketing director.

But he warned some of its recommendations, notably the proposal to allow dealers to buy stock outright, would be difficult to implement.

“In the current environment, it will be difficult for franchised dealers to break away from manufacturer stocking plans. There are so many standards programmes and incentives linked to manufacturer finance,” he said.

“GE Capital Woodchester wants a free market environment. Hopefully, given the stance of the Secretary of State, this will allow us to go into the groups and take out the captive finance company. Not in the short term, but in the medium to longer term.”

Manufacturer-owned finance companies take around 60% to 70% of the new car finance market but only 15% to 20% of the used car market, where the independents dominate.

Grace expected prices to continue to fall and said the industry would have to work with the customers particularly on residual value finance products, such as PCPs.

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