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More efficient system is 'likely' following report

The publication of the Competition Commission report will change the vehicle distribution system in the UK and “provide the impetus for a new and more efficient system, more appropriate to the 21st century”, according to George Weldon, Deloitte & Touche partner.

But he accused Trade and Industry Secretary Stephen Byers and the Government of “playing to the gallery” by creating the expectation among consumers that prices would come down.

Weldon questioned whether that would happen in practice and said he believed there would be a gradual “levelling off” in prices across the market sectors.

He said: “The private buyer will continue to see prices come down and the fleet buyer will find his prices go up a bit. But I would also expect to see continental European prices going up, particularly in high tax countries with relatively small markets.”

Under the Fair Trading Act, Byers published an Executive Order which would become effective by June 10. The industry has until May 19 to comment on his proposals.

They cover four main areas. They are discriminating by price between fleet customers and dealers which are willing to buy stock outright and discriminating in the terms on which new cars are supplied to contract hire companies, depending on the end-user.

In addition, the order seeks to control the prices at which dealers may advertise new cars together with creating agreements which cause dealers to pre-register cars.

The Secretary of State has not ruled out a ban on recommended retail prices and the commission did accept the “concept has some benefits”.

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