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Seven-year hitch hits groups as prices bite

The 2000 AM100 reveals downward pressure on new car prices is hurting franchised dealers, with total turnover dipping –by £107m – for the first time since 1993.

RSM Robson Rhodes, which collaborates with AM on the listing, believes the trend will continue and the new Alliance & Leicester index shows the first all-categories transaction prices fall.

Two Automotive Management surveys show dealers are expecting further cuts. And Dixon Motors has raised the stakes by abolishing manufacturers' “fantasy” lists, promising savings up to 30%.

Piers Trenear-Thomas, of RSM Robson Rhodes, said their research showed the problem was far deeper than lower new car turnover.

“That is the worrying aspect of this for the whole industry,” he said. “People are holding on longer to new and used cars. “Car users are also waiting for longer periods between servicing. This trend, combined with lower prices, is taking its toll.”

Even so, Pendragon becomes the first AM100 group with a turnover topping £2bn. The increase was modest, considering Pendragon's turnover included Lex Retail, which stood at No9 a year ago with a figure of £646m.

Pendragon boss Trevor Finn said the speculation over price cuts cost the firm £60m in lost turnover during the final quarter, taking £7.5m off group profits.

Mr Trenear-Thomas felt a similar decline had been experienced by many smaller dealer groups and it would be a mistake to view this a short-term problem.

“Many people need to be convinced they are being offered something radically different before they will go back into showrooms,” he said.

The £107m decline in the AM100 turnover reduces the total to £25.934bn. In spring 1999, the total sales figure was £26.041bn, up £1.363bn year-on-year. The rate of climb was slowing though because the 1998 figure of £24.678bn was £3.385bn higher than a year earlier.

The turnover decline seems set to continue, judging by the findings of a confidential poll among chief executives of AM100 groups. By an overwhelming margin, they expected new car prices to be lower by next spring.

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