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Reg Vardy boss appeals for calm in face of new residual value disaster

A growing row between manufacturers and dealers over access to fleet discounts could lead to renewed Government interference in the car market that would push residual values to new record lows.

Peter Vardy, chairman of dealership group Reg Vardy, made the warning as part of a plea for market calm to allow recovery from 18 months of pricing uncertainty to help rebuild confidence among buyers.

The Government's Supply of New Cars Order 2000 was intended to draw a line under the car pricing row, with reductions averaging more than £1,000 on most cars and dealerships offered equivalent discount terms to fleets.

Officials warned that a failure to react to the order could lead to further legislation forcing manufacturers to comply.

But many car dealers who expected to see the price of vehicles available to them fall are complaining the reality has 'fallen short' of what they expected from the order.

Industry insiders say that several manufacturers have not met a December 1 deadline to produce fleet equivalent terms for dealerships and that at least one manufacturer has seen all dealers retain their current purchasing arrangements and not switch to buying on fleet terms.

The Office of Fair Trading and the Department of Trade and Industry are already collecting detailed information of the effect of the order to ensure that manufacturers are treating both sides of the industry the same.

Mr Vardy said: "The unprecedented fall in vehicle values made 2000 one of the most difficult for the motor industry in the past three decades. A number of manufacturers have published fleet purchasing terms for retailers. These terms have, to date, fallen short of what the industry expected following the DTI order. "There is a period of settling down that needs to happen. The OFT will be very active in this area and I am sure they are checking current discount levels that manufacturers are giving to fleets. Any further Government action over new car prices would mean used car values would be worth nothing."

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