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Private buyers stay away

Carmakers' claims that car prices have fallen - and will fall no further - are failing to bring customers back to the showrooms.

The latest new car registration figures from the SMMT reveal private buyers are continuing to boycott the industry. They believe there are significant price cuts still to come and are prepared to wait before parting with their cash.

The new car market in June was marginally down on the same month last year at 193,360 units, a fall of 1.57%. But it was bolstered by increased demand from the small business market and steady fleet sales. Demand from private buyers dropped by 10% to just over 42% of the total.

Dealers say the problem is a lack of footfall in showrooms. The latest advertising campaigns, which disguise price cuts as dealer prices, cashbacks or special offers, have failed to convince the public they are getting a better deal. To date, of the volume carmakers, only Nissan and Rover have advertised cuts in list prices.

Gerard Ryan, GE Capital Woodchester managing director, has called the present situation “price cuts by stealth” and said carmakers only had themselves to blame. He said they had lost public confidence by refusing to cut list prices despite Government and consumer pressure.

Alan Pulham, NFDA director, said: “It is apparent consumers are still reluctant to buy new cars. It seems they are waiting for a formal statement saying prices will come down and match the rest of Europe.”

The SMMT said the figures were affected by a record breaking June last year, when customers were attracted by a wealth of special promotions such as free insurance and low cost finance. Year-to-date the market is up by 2.11% at 1,216,445 units and the SMMT is still predicting 2.2m units for the full 12 months.

Small business registrations are up by 30% for the year and now take more than 10% of the total market. Dealers say a significant proportion are preregistered demonstrators but they are also having considerable success selling to local businessmen. There are huge incentives available – up to 35% off list for D-sector cars such as Renault Laguna and Ford Mondeo, both of which are due for replacement later this year.

Winners in the market place are typical small business makes such as Audi, Mercedes-Benz, Jaguar and Honda. A Mercedes-Benz spokesman admitted the company was making extra trading money available to dealers to ensure “there has never been a better time to buy”.

Ford is continuing to see its market share slip with Mondeo performing badly despite the incentives. The company is now outsold in the fleet market by Vauxhall, which has been pushing Corsa particularly hard.

For the first time the official figures split Land Rover from Rover Cars. Neither is performing well. The fleet business has deserted Rover until present uncertainties are resolved – total registrations slumped 21.69% year-on-year, giving a market share in June of 3.94%.

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