AM Online

Choice of package causes indecision

For the second month running carmakers find themselves in limbo - unsure about which finance marketing package will work best in the run-up to September and the vital plate change.

They know customers are staying away and are likely to continue to do so until there is clear evidence car prices have fallen. But the dilemma is how to cut prices and still afford to offer the well-proven incentives, such as free insurance or 0% finance, which have proved successful in the past.

The result is there are fewer genuine low rate finance offers in the market. Even Renault Financial Services, usually one of the most aggressive in the business, is entering the next quarter with APRs closer to 10% than 5%. Most other companies are well into double figures, particularly on PCP packages where rapidly falling residuals are making the industry increasingly nervous about guaranteed future values.

There has been a resurgence of 0% deals. But initial deposits are climbing back to 50% and terms are shortening. The exception here is Fiat which has some highly competitive deals on the table and even has the recently launched Multipla available at 0% over three years with 30% down.

Many carmakers are choosing to spend their marketing budget on 'below-the-counter' trading bonuses for dealers rather than advertised price cuts or bundled packages. This gives carmakers more control but does little to attract customers into the showroom.

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