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'Industry must sort out car prices' - DTI

Trade and Industry Secretary Stephen Byers' new car pricing order is intended to create more competitive trading rather than specifically force price cuts, according to a DTI spokesman. The spokesman dismissed media reports that said Mr Byers' was demanding carmakers cut prices by 10%, leading to average savings of £1,100. “The 10% figure came from the Competition Commission inquiry, it is not a Government target,” he said. “Pricing is a matter for the industry to sort out.” The spokesman acknowledged some manufacturers, such as Mitsubishi and Land Rover, had already taken action to cut prices. The latest Alliance & Leicester index shows new car transaction prices continue to tumble. In June, they fell on average 4.6% year-on-year. Prof Garel Rhys, of Cardiff Business School, warned that the DTI requirement for carmakers to make their first offer of volume-related discounts to dealers by December 1 would mean “months of doubt in buyers' minds”. Chief executive Peter Jones said Sanderson Bramall was well placed to take advantage of fleet-style discounts. “We are talking informally to manufacturers but remain cautious until we see their formal offers in December,” he said. Sanderson Bramall this week announced pre-tax profits 9.3% up at £10m on a first-half £440m turnover. Dealers who opt for fleet-type discounts may face a backlash from carmakers, however. Several bosses have threatened to withdraw financial support, which could include advertising funds, training assistance, recruitment and used car schemes. Cap Motor Research heavily criticised the Government for “political point scoring”. It claimed that consumer confidence had been undermined, leading to “plunging used car values” averaging at around £1,000 for a three-year-old car. With 15m cars on the road with a viable resale value, Cap calculates that the Government has cost owners around £15bn. Arnold Clark, whose dealer group is the UK's seventh largest, said prices could rise to offset falling manufacturer profits in Europe. Mr Clark said: “Prices are probably at their lowest point.”

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