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Retailers query 'can't cut' claim

Franchised dealers do not believe carmakers are genuine when they claim it would be hard for them to reduce UK new car prices, according to the latest dealer opinion survey.

Society of Motor Manufacturers and Traders' chief executive Christopher Macgowan, addressing Automotive Management's prices report breakfast briefing in April, said his members were “finding it difficult to see where the scope for price cutting comes from”.

More than two in three (69%) of car dealers questioned for the survey did not believe manufacturers were truthful in expressing this view to the SMMT. But 25% accepted the manufacturer view, while 6% did not know.

Even so, 77% of those surveyed said car prices would be lower by this time next year, with 57% expecting the drop to be 6-10%.

Mr Macgowan told delegates the Competition Commission report was fair but SMMT members “would be apoplectic if some of the main proposals were deemed to be appropriate”. Mr Macgowan said the proposal that dealers should qualify for fleet-style volume discounts was the key issue in the whole report.

“There is no such thing as a fleet price list and no way of establishing what is a fleet price,” he said.

Publishing the Competition report earlier in April, Trade and Industry Secretary Stephen Byers promised to take “immediate steps” to implement the recommendations.

The report found new cars in the UK were “between 10% and 12% higher than in comparable European countries, such as France and Germany. Mr Byers said dealer groups should qualify for fleet discounts if they bought outright. In the AM survey, dealer executives were divided over whether they would gain the same discounts as fleet operators. The 'yes' vote was 48%, with 40% saying 'no' and 12% undecided.

Of those questioned, 71% expected dealer groups to find a way to buy outright, rather than through customary finance stock arrangements. Another 20% disagreed, with 9% saying they did not know.

The majority (72%) were concerned dealership groups with a turnover of £100m or less would suffer because large groups could negotiate bulk discounts. Twenty-three per cent disagreed, and 7% were uncertain.

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