AM Online

Price freeze' damages Ford

Government hints of price cuts of 10% or more off new cars killed any hopes of a market recovery in April. Dealers say the month started strongly, with customer confidence beginning to return to the market and buyers well aware of the special offers available.

But that enthusiasm soon died after Stephen Byers, trade and industry secretary, promised action following publication of the Competition Commission report.

From a mid-month high of 11% up, new car registrations slumped in the second half to end 8.11% down compared to the same period last year. Total new car registrations for the year are now marginally ahead (up 1.22% on last year) and the SMMT continues to forecast a 2.2m unit total for the year.

“Things looked good in the first couple of weeks but slowed quite dramatically after the Government announcement,” said one dealer principal. “Customers still believe there are more price cuts to come.”

Carmakers who did not react to the price cutting message were hardest hit. Ford, which had simply rolled over its March finance campaign into April while it waited for the report publication, lost more than 9,300 units. Even Volkswagen, until recently viewed as a sure-fire seller, saw its volume fall by 21%. Both companies have responded with price cuts in May.

Customers flooded back to Rover, partly on a wave of sympathy but more specifically on the back of some good, heavily advertised finance packages, which saw the group's sales, including Land Rover, more than doubled and the company achieved its best market share since the days of volume sellers such as the Rover 100. Dealers say that, mid-month, market penetration was even better at around 18%.

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